Confirming the suspicions of some economists and activists, Hispanic purchasing power is much greater than previously thought, raising the possibility that the nation's fastest-growing minority group will increasingly become the focus of corporations eager to develop new markets for their products and services.
According to HispanTelligence, the research division of Hispanic Business Inc., Hispanic purchasing power currently exceeds $492.5 billion – $210 billion more than the $282.5 billion figure published just last December by HISPANIC BUSINESS magazine ("Media Markets Report").
HispanTelligence senior economist John Cobin says the revised figure, which is the result of a new formula for calculating purchasing power as well as updated population and immigration data, is a more accurate measure of Hispanic economic clout.
"Our figure is actually conservative relative to others being discussed in some quarters. But we're confident that our methodology produces sound results," says Mr. Cobin, who also serves as the research director for Hispanic Business Inc.
As recently as March, the marketing firm Santiago & Valdés Solutions pegged Hispanic purchasing power at upwards of $630 billion. The University of Georgia's Selig Center for Economic Growth puts the figure at $452.4 billion.
HispanTelligence's new formula for calculating collective Hispanic purchasing strength takes into account both illegal immigrants and state taxes. Whereas previous figures published in HISPANIC BUSINESS were based in part on per capita "money income" estimates compiled by the U.S. Census Bureau, the new method relies on Bureau of Economic Analysis per capita income data. The latter are more consistent with GDP income accounting practices and incorporate more complete wage and non-wage earnings information, according to Mr. Cobin. He says HispanTelligence will update the new figure in successive issues of HISPANIC BUSINESS.
Mr. Cobin emphasizes that the revised purchasing-power figure is as much a function of changing demographics as it is the result of a new technique for interpreting data. According to the latest census figures, the nation's Hispanic population grew by almost 60 percent between 1990 and 2000. Hispanics currently account for 12.5 percent of the overall U.S. population, surpassing African Americans -- who constitute 12 percent -- to become the country's largest minority group.
Census data indicate that the number of U.S. Hispanics earning more than $50,000 annually grew by 128.6 percent between 1994 and 2000, and there seems little doubt that Hispanic economic influence is on the rise. Prior to the nation's current economic malaise, for instance, many large corporations were poised to increase their Hispanic-market ad budgets, according to Joe Zubizarreta, executive vice-president of Zubi Advertising Services in Coral Gables, Florida, which handles Hispanic media buying for Ford, Mobil, and American Airlines, among others.
"This year's been kind of a catch-22. With the census figures showing more Hispanics, momentum has been building to invest more in this market. But with the Big 'R' word on everyone's mind," ad budgets remain flat, says Mr. Zubizarreta.
Another indication that Hispanic consumers are coming into their own, he says, is the emergence Hispanic media outlets outside the traditional markets of California, Texas, and Florida. As the economy improves, he expects to see more companies try to appeal to Hispanics through television and radio campaigns in such areas as Chicago, Boston, and Washington, D.C.
More encouraging still, the latest census data indicate that Hispanics have a disproportionately large youth segment, which should fuel future affluence, according to Mr. Cobin. HispanTelligence estimates that Hispanics age 16 to 24 wield purchasing power in excess of $25 billion.
Carlos Santiago of Santiago & Valdés says Corporate America must reassess its ad spending priorities if it's to compete for the loyalties of Hispanic consumers.
"Corporate America cannot continue to wait on investing in the Hispanic market," he says. "The size of the Hispanic market has repeatedly caught Census forecasters by surprise. Those corporations that have been successful in reaching the Hispanic market did not wait for the Census numbers to develop multicultural marketing strategies. They realized the Hispanic market's full purchase-dollar potential and seized the opportunity."
Mr. Cobin has reservations about Mr. Santiago's optimism but agrees that U.S. Hispanic affluence is growing and likely will surge in the next decade.
"Our analysis, which, unlike some other purchasing-power figures, is predicated on published data, suggests that Hispanic economic influence is only going to get stronger," he says.
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