Athens, Ga. - According to the Selig Center for Economic Growth at the University of Georgia's Terry College of Business, the buying power of minorities in the U.S has grown into a diverse and formidable consumer market in the last decade. The rise of minority buying power in the marketplace has generated a demand to learn why these gains are taking place as well as how to tailor products, advertising and media to each market segment.
"The numbers are impressive," says Jeff Humphreys, director of the Selig Center and author of the Selig Center's annual Multicultural Economy report. "For example, in 2012, the $1.2 trillion Hispanic market is larger than the entire economies of all but 13 countries in the world."
The Selig Center's annual report includes state-by-state projections of buying power for the nation's three most populous racial groups (African American, Asian and American Indian), as well as Hispanics, who are categorized by the U.S. Census as an ethnic minority and not a racial minority. Its information provides businesses a first step towards a more comprehensive analysis of its markets and is among the most popular and downloaded resources offered by the Terry College.
According to Humphreys, buying power, also referred to as disposable income, is the total personal income available for spending on goods and services after taxes. The state-by-state projections are broken down by market size, growth rate and market share.
Other notable insights from this year's report include:
- Total annual buying power in the United States, combining all racial categories, will exceed $12.2 trillion – an increase of 188 percent from 1990-2012.
- African American buying power will increase 73 percent between 2000 and 2012, which not only overtakes the 60 percent increase in Caucasian buying power, but also the 67 percent rise in total buying power of all races combined. Two factors contributing to the gains include a 61 percent increase in black-owned businesses in the five-year period between 2002 and 2007 and 84 percent of blacks over 25 years of age completing high school or college – a sharp increase from 66 percent in 1990.
- Americans of Asian ancestry, representing the third largest minority group, has achieved a 165 percent gain in buying power between 2000 and 2012 and will reach $1 trillion in 2017. The U.S. Asian market is already larger than the economies of all but 17 countries in the world. The Asian population is growing faster than the total U.S. population and the Selig Center projects the population to reach 17.2 million in 2012-a gain of 55.2 percent from 2000's base population of 11.1 million. Demographic studies reveal 52 percent of Asians over 25 had a bachelor's or advanced degree compared to 30 percent of Caucasians. Because the Asian consumer market is so diverse in national ancestries, languages and cultures, businesses that target subgroups will find rewarding niche markets.
- Georgia is now the 5th largest African-American consumer market in the United States ($73 billion) and owns a 21.8 percent share of total buying power for the state-the fourth largest share of any state. Compared to the Hispanic and Asian markets, which are concentrated in a handful of states, the African-American market is widespread and makes it an attractive customer segment.
Available for purchase from the Selig Center as a pre-packaged book and CD, "The Multicultural Economy" estimates minority 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.
Simon S. Selig, Jr. Center for Economic Growth