The multicultural buying power of US consumers continues apace: A new report from the University of Georgia's Terry College of Business reveals, for example, that the buying power of US Hispanic consumers is now larger than the gross domestic product of the entire country of Mexico. The lesson for marketers: ignore cultural segmentation of your customers at your peril.
By Wise Marketer staff
Published by the university's Selig Center for Economic Growth, the multicultural Economy Report estimates the total buying power of US consumers at $13.9 trillion in 2016 and will grow to $16.6 trillion in 2021. During this time, minority group spending power will grow the fastest. The report defines "buying power" as the total personal income of residents that is available for spending after taxes. The report estimates its buying power by applying economic modeling and forecasting techniques to data from various federal sources.
More details from the report, courtesy of these summaries from the Atlanta Business Chronicle and UGA Today:
- Hispanic buying power grew from $495 billion in 2000 to $1.4 trillion in 2016, accounting for nearly 10 percent of total U.S. buying power in 2016. Mexican-Americans representing the largest group and accounting for $797 billion worth of buying power, followed by Puerto Ricans, who account for $146 billion. The Hispanic population in the US is also very young, with 35 percent under the age of 18.
- African-American buying power, estimated at $1.2 trillion in 2016, will grow to $1.5 trillion by 2021. African-Americans represent the largest US minority market by population; Hispanic buying power, however, is larger. The number of African-American-owned businesses grew 34 percent between 2007 and 2012 alone.
- Asian-Americans make up 6 percent of the population and control 6 percent of its purchasing power. Since 2000, Asian buying power has grown 222 percent to $891 billion, the biggest percentage increase of any U.S. minority group. California is the largest Asian consumer market in the US, but many states are seeing significant increases. In 2000, only six states had more than $10 billion in Asian-American buying power annually, but 18 states exceeded that mark in 2016.
The combined buying power of African-Americans, Asians and Native Americans is estimated to be $2.2 trillion in 2016, a 138 percent gain since 2000. The same time period saw the buying power of Asian-Americans grow by 222 percent, Native Americans by 164 percent and African-Americans by 98 percent. All of those markets are expanding faster than the buying power of white Americans, which increased by 79 percent. Money quote from Selig Center director Jeff Humphreys:
"As America grows more diverse, minority groups are reaping great economic dividends, and business owners would do well to pay attention. Minority buying power is growing at a faster pace than the white consumer market for a number of reasons, such as demographics, increases in educational attainment and entrepreneurial activity."
The full report is available for purchase here.