Growth in the U.S. market is increasingly driven by Hispanic and Asian consumers, to the tune of nearly $2 trillion per year. That’s one takeaway from the 2015 Multicultural Economy Report from the University of Georgia’s Selig Center for Economic Growth.
The nation’s projected total buying power in 2015 is $13.5 trillion, a 213 percent growth since 1990. That number is bolstered by an increasingly diverse populace, according to the annual report, which provides a comprehensive statistical overview of the buying power of African-Americans, Asians, Native Americans and Hispanics for the U.S. and each of its states.
For example, the U.S. Hispanic market in 2015 will be $1.3 trillion, which is larger than the GDP of Mexico. In 2020, that amount will reach $1.7 trillion. The Asian market, comprised of 18.3 million Americans, will be $825 billion in 2015 and grow to $1.1 trillion in 2020.
“The Asian and Hispanic markets will really drive the U.S. consumer market,” said Jeff Humphreys, director of the Selig Center. “Those two groups will account for a disproportionate amount of growth. The African-American market will still expand at a rate that’s compelling, but the Asian and Hispanic markets are where you see the really fast-paced growth.”
The report predicts that African-American buying power will be $1.2 trillion in 2015 and reach $1.4 trillion in 2020, up from $320 billion in 1990.
This year’s report, available for purchase at the Selig Center’s website, also breaks down the buying power of minority subgroups, such as Mexicans and Puerto Ricans in the Hispanic category, and Asian Indians, Chinese and Japanese in the Asian category.
Richer data can help businesses fine-tune their marketing efforts toward specific consumers, Humphreys said.
“Although we’re already splitting the U.S. market into a number of groups, within each of these large groups are very distinct subgroups that are often quite different culturally and could respond to advertising in different ways or may have preferences in terms of products that differ among the groups because of difference in culture or countries of origins,” Humphreys said. “So the one-size-fits-all marketing approach may not work as well as a more targeted strategy.”
“We have the per capita amounts for these subgroups, which can explain a lot. The Asian Indian subgroup is actually smaller in population than the Chinese subgroup, but their per capita buying power is just off the charts,” he added.
Humphreys has been preparing the Multicultural Economy report for 24 years. Since 1990, he has documented the ups and downs of U.S. consumers.
“The biggest change I’ve seen over time is the focus or the interest level has increased for Hispanic estimates after Census 2000,” he said. “That was kind of a wakeup call to corporate America about the importance of the Hispanic consumer. Many companies found that they were behind in terms of targeted market efforts to Hispanic consumers.”
“Since the Great Recession, I’ve seen an interest in the Asian buying power numbers pick up,” he added. “Part of the reason for that is demographics—there are just more Asian consumers now. But another reason is the fact that the Asian group was less affected by the Great Recession than the other groups. That’s primarily because Asians tend to be very highly educated and therefore were in occupations and industries that were less affected by the Great Recession. Asian buying power held up better than the buying power of the other groups, so I think companies were looking for opportunities in that market more than they were prior to the Great Recession.”