Hispanic buying power in the US is forecast to top that of all minority groups by next year, overtaking the African-American population, according to a new report.
Released last week, the report by the Selig Center for Economic Growth at the University of Georgia revealed that by 2007 Hispanic purchasing power will reach $863.1bn.
"The economic clout of Hispanics has risen from $212bn in 1990, when I first started doing this study, to $798bn this year and I expect it to be almost $1.2 trillion five years from now," said Jeff Humphreys, director of the Selig Center.
"That's more than 450 percent growth from 1990 to 2011. Non-Hispanic buying power is growing closer to a rate of 176 percent over the same period."
In fact, population counts have revealed that Hispanics actually surpassed blacks as the nation's largest minority group five years ago. But in terms of spending power, 2007 will mark the first year that Hispanics control more disposable personal income than any other US minority group.
"Still, even as Hispanic buying power overtakes African American buying power at the national level, it is important to recognize that in the majority of states the African American market will continue to be much larger than the Hispanic market," Humphreys said.
"This insight reflects the fact that Hispanics and their buying power are much more geographically concentrated than non-Hispanics or African Americans. For example, California alone accounts for 27 percent of all Hispanic buying power in the US."
The report, which estimates minority buying power by applying economic modeling and forecasting techniques to data from various US government sources, includes state-by-state projections of buying power for the nation's three most populous racial groups, as well as Hispanics, who are categorized by the US Census as an ethnic minority and not a racial minority.
Buying power, also referred to as disposable income, is the total personal income available for spending on goods and services after taxes.
According to Humphreys, the remarkable gains in Hispanic buying power are largely explained by immigration and population growth. Between 1990 and 2011, the beginning and ending boundaries of the study, Hispanic population is expected to increase 126.4 percent, compared with 15.4 percent for the nation's non-Hispanic population.
Other driving forces boosting the Hispanic consumer market include better employment opportunities and higher business ownership, said the report.
Asian buying power comes behind Hispanic buying power as the second fastest projected rate of growth. This is forecast to grow 434 percent between 1990 and 2011, compared to the 457 percent gain for Hispanics.
Indeed, according to Humphreys, Asian buying power is attaining critical mass in a growing number of states. In 2000, only six states had more than $10bn in Asian buying power. As of 2006, 11 states have reached that benchmark, on its way to 14 states by 2011.
However, California still accounts for 33 percent of the nation's Asian consumer market. Asian buying power in California stands out as the only racial minority market at the state level to exceed $100bn (totaling $140.5bn), said the report. California's Hispanic market is larger still - $214.5bn - but this is defined as an ethnic minority.
"The African American consumer market is more widespread geographically than the Hispanic or Asian markets, but also large enough to represent an attractive customer segment in many of the states," said the report.
Five states had black consumer markets estimated at more than $50 billion in total market size for 2006: New York, Texas, California, Georgia and Florida. From 1990 to 2006, black buying power has grown fastest in western states: Nevada (449 percent), Idaho (434 percent), Utah (386 percent) and Montana (368 percent).
Buying power for Native Americans, the smallest of the four minority groups included in the Selig Center report, is set to total $53.9bn in 2006 and rise to $73bn in 2011. Native American buying power in 1990 was $19.7bn.
"That projects to 270 percent growth in buying power from 1990 to 2011, which exceeds the estimated growth rate for US buying power as a whole (190 percent) over the same period. But Native American buying power will account for only 0.6 percent of all US buying power in 2011," said the report.