Consumer buying power is more diverse than ever
In the 30 years since the University of Georgia's Selig Center for Economic Growth launched its Multicultural Economy report, the population of the United States has grown more racially and ethnically diverse and so has the nation's buying power.
With the release of the 2021 report, the Selig Center issued new estimates of minority buying power for the U.S. and all 50 states. The takeaway: Asian Americans, African Americans and Hispanics wield formidable economic clout. And companies can no longer take a one-size-fits-all approach to marketing consumer goods and services.
"The buying power estimates and differences in spending by race and/or ethnicity suggest that as the nation's consumer market becomes more diverse, advertising, products and media must be tailored to each market segment," said Jeff Humphreys, director of the Selig Center and author of the Multicultural Economy report.
A public service and outreach unit of the Terry College of Business, the Selig Center has produced a Multicultural Economy report each year since 1990, except for 2020 when data disruptions following the COVID-19 pandemic delayed production.
Based on data provided by the U.S. Census Bureau, the U.S. Bureau of Economic Analysis and other sources, the Selig Center estimates the buying power for African American, Asian American and Native American consumers, which has exploded over the past 30 years, up from $458 billion in 1990 to $3 trillion in 2020. In addition to increasing sheer size, their combined share of the nation's total buying power increased from 10.6% in 1990 to 17.2% in 2020.
Hispanic buying power also has grown substantially over the last 30 years, from $213 billion in 1990 to $1.9 trillion in 2020. Hispanic buying power accounted for 11.1% of U.S. buying power in 2020, up from only 5% in 1990.
The diversification of the U.S. consumer market has been driven by many factors, including population growth, favorable demographics, entrepreneurial activity and rising levels of educational attainment, Humphreys said.
"A major factor underpinning the growth of the nation's minority markets is that African Americans, Asians and Hispanics continue to become more highly educated, which allows proportionally more Blacks, Asians and Hispanics to enter occupations with higher average salaries."
Total U.S. Buying Power
The report defines consumer buying power as total income after taxes. The combined buying power of U.S. consumers grew from $11.3 trillion to $17.5 trillion between 2010 and 2020, or by 55%.
Over the same time period, Asian American buying power grew by 111%; the buying power for those of Hispanic ethnicity grew by 87%, Native American buying power grew by 67%, and African American buying power grew by 61%.
Hispanic Market GrowthThe Hispanic market is the largest minority market in the U.S. and continues to expand briskly. The group's spending power grew to $1.9 trillion in 2020, an increase of 87% from 2010.
In 2020, the 10 states with the largest Hispanic markets, in order, are California ($506 billion), Texas ($361 billion), Florida ($208 billion), New York ($139 billion), New Jersey ($70 billion), Illinois ($68 billion), Arizona ($63 billion), Colorado ($40 billion), New Mexico ($32 billion) and Washington ($31 billion).
The states with the fastest growth in the Hispanic market between 2010-2020 are North Dakota (206%), South Dakota (136%), Montana (133%), Idaho (121%), District of Columbia (119%), New Hampshire (118%), Oregon (115%), Washington (114%), Massachusetts (113%) and Pennsylvania (112%).
The Multicultural Economy report also includes national market estimates for seven of the largest Hispanic subgroups in the United States. Persons of Mexican origin constitute are the largest subgroup and account for 56% of Hispanic buying power in the U.S.
Asian American Market GrowthAlmost 21 million Asian Americans, including Native Hawaiians and Pacific Islanders, represent 6.3% of the U.S. population. The group's buying power of $1.3 trillion is larger than the annual economic GDP of all but 13 countries.
In 2020, the 10 states with the largest Asian consumer markets are California ($439 billion), New York ($109 billion), Texas ($100 billion), New Jersey ($70 billion), Washington ($58 billion), Illinois ($49 billion), Virginia ($39 billion), Florida ($37 billion), Massachusetts ($36 billion) and Hawaii ($36 billion).
The states with the fastest growth in the Asian market between 2010-2020 are Washington (174%), South Dakota (164%), Utah (157%), Vermont (154%), Indiana (146%), Montana (145%), Texas (153%), Oregon (142%), North Carolina (142%) and Georgia (138%).
The report provides data on 17 subgroups of U.S. Asian consumers, such as Chinese, Indians and Filipinos. The market's diversity is both a strength and a challenge to marketers, Humphreys said.
African American Market GrowthIn 2020, African American economic clout energized the U.S. consumer market as never before. The buying power of African Americans rose to $1.6 trillion, or 9% of the nation's total buying power.
In 2020, the 10 states with the largest African American markets are Texas ($149 billion), New York ($141 billion), Georgia ($118 billion), California ($118 billion), Florida ($116 billion), Maryland ($86 billion), North Carolina ($75 billion), Virginia ($67 billion), Illinois ($63 billion) and New Jersey ($57 billion).
The states with the fastest growth in Black buying power between 2010-2020 are North Dakota (316%), South Dakota (146%), Hawaii (113%), Idaho (109%), Washington (104%), New Hampshire (104%), Oregon (103%), Wyoming (103%), Arizona (103%) and Nevada (101%).
Native American Market GrowthThe Selig Center projects that the nation's Native American buying power will rise from $84 billion in 2010 to $140 billion in 2020. Between 2010 and 2020, Native American buying power grew by 67%.
In 2020, the 10 states with the largest Native American markets are California ($25 billion), Oklahoma ($13 billion), Texas ($12 billion), Arizona ($9 billion), New York ($7 billion), New Mexico ($6 billion), Washington ($5 billion), Florida ($5 billion), North Carolina ($5 billion) and Alaska ($4 billion).
The states with the fastest growth in the Native American buying power between 1990 and 2020 are Utah (104%), Idaho (89%), Washington (87%), Rhode Island (87%), Colorado (86%), Florida (86%), Arizona (84%), Nebraska (84%), Oregon (83%) and Tennessee (80%).
- The $1.3 trillion Asian American market in the U.S. is larger than the economies of all but 13 countries around the world. It is slightly larger than the gross domestic product of Spain and slightly smaller than the GDP of Australia.
- In 2020, Asian Indians account for 29 percent of U.S. Asian buying power, or $381 billion.
- In 2020, Hispanic buying power in the U.S. reached $1.9 trillion, which is larger than the GDP of Italy and slightly smaller than the GDP of France.
- From 2010-2020, North Dakota saw the fastest growth in African American (316%) and Hispanic (206%) buying power.
- From 2010-2020, Washington and South Dakota saw the fastest growth in Asian buying power, 174% and 164% respectively.