01 November 2006
Hispanics Gain Growing Share of U.S. Consumer Spending
Ethnic group to wield more spending power than any other minority group
Washington -- In 2007, Hispanics will control more disposable personal income than any other U.S. minority group, and businesses are paying close attention to Hispanic tastes.
Hispanic consumer spending power (disposable personal income) is expected to top $863 billion in 2007, some 300 percent higher than it was in 1990, according to the Selig Center for Economic Growth at the University of Georgia. During the same period, spending power of non-Hispanics is projected to rise 125 percent.
One in seven people in the United States is Hispanic – of Mexican, Puerto Rican, Cuban or other Spanish/Hispanic/Latino culture or origin. Hispanic is an ethnic category, rather than a race. The Spanish language is the unifying factor.
The Department of Labor’s Survey of Consumer Expenditures shows Hispanics spend more than non-Hispanics on groceries, telephone services, appliances, vehicles, clothing and housing. For instance, in 2004, spending on food at home was $3,883 per Hispanic household, compared to $3281 per non-Hispanic household. Supermarkets in the United States are designating larger sections for Hispanic foods.
Hispanic households might spend more on these consumer items because they are more likely to be in a household-forming stage of life than the general U.S. population, according to Jeff Humphreys, director of the Selig Center. The median age of Hispanics is 27, compared to 36 for the entire population, and the average Hispanic household has 3.5 people, compared to 2.5 for non-Hispanic households.
Humphreys said other products and services, ones on which Hispanics underspend today, might attract their spending in coming years – health care, education, personal insurance or pensions, for instance.
U.S. businesses are taking note of the economic clout of Hispanics by designing products, services and advertising to appeal to them. Car sales to Hispanics grew 9 percent over the last five years, according to Cynthia McFarlane, managing director of Conill Advertising Inc. Her company developed a Toyota television ad featuring a father and son speaking in Spanish and English. The ad first aired during the 2006 Super Bowl, one of America’s most popular sporting events.
José López-Varela, of the Association of Hispanic Advertising Agencies, said spending on advertisements targeting Hispanics is growing at almost four times the pace of overall advertising spending. López-Varela’s agency, ADN Communications in Florida, recently worked on an ad campaign for Royal Caribbean Cruises that emphasized family travel and featured the Mexican band Maná.
Since June, Cingular Wireless of Atlanta has converted 500, or 20 percent, of its phone stores nationwide to include signs in Spanish and employ bilingual salespeople.
The American Community Survey, which collects demographic details between decennial censuses, reports that the share of Hispanics owning homes rose 2.2 percent from 2000 to 2005, easily outpacing changes for non-Hispanic whites (up 0.8 percent) and African Americans (down 1.2 percent). Asian home ownership rose fastest, at 5.2 percent.
Hispanic consumers’ clout may seem incongruous with the group’s low scores on economic-related measures. For example, the American Community Survey shows that in 2005, Hispanics’ average income was only 72 percent of that of non-Hispanic whites. Roughly half of Hispanics owned their homes, compared to three-fourths of non-Hispanic whites. Just 12 percent of Hispanics over age 24 were college graduates, compared to 30 percent of non-Hispanic whites and 49 percent of Asians.
“There is more room for advancement of Hispanics than for others,” said the Selig Center’s Humphreys.
GROWTH IN COLLEGE ENROLLMENT
From 2000 to 2005, Hispanics experienced faster growth in the share of their population going to college than all other groups and were second to Asians in growth rate of college graduations.
“There are a lot of moving parts here,” said Jeffrey Passel, demographer for the Pew Hispanic Center. He points out that large numbers of Hispanics are recent arrivals to the United States. In 2000, half of Hispanics had been in the United States for 10 years or less.
New immigrants might have lower average incomes, Passel said, but the Hispanic population is on the “cusp of change” -- because an increasingly large portion of the Hispanic population has been in the United States for a long period of time. That matters: During the 2000-2005 period, the rise in home ownership by Hispanics who had been in the United States for more than 10 years was double that for all Hispanics.
The majority of the growth in the Hispanic population during coming years is projected to come from births of second-generation Hispanics, rather than immigration, for the first time since the 1940s, Passel said.
The relative youth of the Hispanic population compared to other groups also means that large numbers of Hispanics are entering the work force and will reach better pay as they scale career ladders during the coming decade, Humphreys said.
In addition, Hispanic-owned businesses in the United States are growing three times faster than the national average for all firms and generated more than $200 billion in annual revenue in 2002. (See related article.)
For more information on U.S. society, see Population and Diversity.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
