Minority Buying Power Made Dramatic Gains Over The Past 12 Years.

The amount of disposable income available to minority households grew by leaps and bounds during the decade of the ‘90s, and the trend is likely to continue over the next five years, according to a report released by the University of Georgia’s Terry College of Business and the Selig Center for Economic Growth.

The report shows substantial gains in after-tax income among African Americans, Hispanics, Asians and Native Americans, thanks to fundamentally strong national and regional economies that benefited most U.S. consumers between 1990 and 2002.

It also forecasts continued rapid growth in total buying power over the next five years for the nation’s major racial and ethnic groups, thanks to both favorable demographics and better employment opportunities.

“The immense buying power of the nation’s Hispanic, African-American, Asian, and Native American consumers is energizing the U.S. consumer market as never before,” said Jeff Humphreys, Selig Center director and author of the report. “The statistics for each group are very compelling, and suggest we are experiencing a shift in economic power that’s reshaping the retail and commercial landscape of America.”

Interesting revelations from this year’s Minority Buying Power report include:

• California is the number one-ranked state in the U.S. in terms of total buying power for every minority group except African Americans (New York was number one in that category; California was number two).

• Hispanic buying power in California is an estimated $170.7 billion, almost twice that of number two–ranked Texas.

• Hispanic buying power is increasing faster nationwide than that of any other minority group. In terms of sheer dollar power, Hispanics’ economic clout nationally rose from $223 billion in 1990 to $490.7 billion in 2000 to $580.5 billion in 2002. By 2007, Humphreys projects it will top $926.1 billion.

• Based on its size, growth rate and concentration, Georgia is the nation’s most attractive African American market. It’s the fourth-largest and the seventh-fastest growing. Nineteen cents of every consumer dollar spent in Georgia are spent by African Americans.

• Asian buying power, which started at $117.6 billion in 1990, is projected to reach $454.9 billion by 2007. That gain of 287 percent over the 17-year period is substantially greater than those gains projected for whites (112 percent) and the nation as a whole (131 percent) during the same period. The state where Asians have the largest share of total buying power is Hawaii, where they account for 49 percent of consumer dollars. The state where Asian buying power grew the fastest since 1990 is Nevada (362 percent).

Buying power, also referred to as disposable income, is the total personal income an individual or group has available after taxes for spending on goods and services. Humphreys said the fast-paced growth of minority buying power is buoying the sales of an entire spectrum of goods and services that American households purchase. Finding ways to successfully tap into and service these market segments will be critically important for corporate America in the decades to come, he said.

“For example, the U.S. Hispanic market is already larger than the entire economies of all but eleven countries in the world, and by 2007 it may exceed the GDP of Canada, the eighth largest economy in the world,” said Humphreys. “This is an exciting and challenging time for American businesses.”

“The Multicultural Economy: Minority Buying Power in the New Century” is the latest in a series of state-by-state studies of minority buying power Humphreys has been conducting since 1990. Initially limited just to African Americans, he gradually expanded the series to include the nation’s four most populous minority groups. The report estimates buying power by applying economic modeling and forecasting techniques to data from various U.S. government sources. The model developed by the Selig Center integrates statistical methods used in economic forecasting with those of marketing research.

In addition to the state-by-state breakdowns, the 2002 report also breaks down minority buying power on a county-by-county basis and by Metropolitan Statistical Areas (MSAs) for Georgia and Florida. In comparison, the U.S. Bureau of Labor Statistics annually publishes only national and regional estimates on what consumers purchased in the previous year, without any year-to-year perspectives or projections.

The Selig Center for Economic Growth was established in 1990 in memory of Atlanta entrepreneur Simon S. Selig Jr., a 1935 UGA graduate, by his son, Steve Selig, and daughter, Cathy Selig, both of Atlanta. The Selig Center is responsible for the college’s annual Georgia “Economic Outlook” forecast, but also produces studies for the state and the private sector.

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Additional information on the 2002 Selig Center Minority Buying Power report is available through the Internet at www.uga.edu/news/specialreport/buyingpower.