Hispanic spending growth on rise

Study projects increase significantly exceeding expected national rate

April 27, 2003|By Joseph Mann | Joseph Mann,SPECIAL TO THE SUN

A new study of the Hispanic market in the United States projects increases in household disposable income and consumer spending through 2020 that significantly outpace the expected national growth rate.

The study based its estimates on the continued rapid expansion of the Hispanic population.

Titled "Snapshots of the U.S. Hispanic Market," the report, released last week, said Hispanic spending patterns "often show a sharp contrast of growth in an otherwise flat market. It also seeks to highlight the importance of targeting Hispanic consumers to achieve maximum sales gains.

A variety of areas, including new automobile and light-truck sales, financial products, prescription drugs, retail sales, home improvement and fast-food restaurants can expect much greater growth from the Hispanic population in coming years than from the general population, the report predicted.

It said the Hispanic population reached 38.5 million last year, or 13.4 percent of the total, and that it will continue to grow at an average of 2.8 percent a year from 2002 to 2020, compared with 0.8 percent growth for the total U.S. population. By 2020, Hispanics are expected to make up 18.9 percent of the population.

Average disposable income per household for the Hispanic population last year was $56,431, or 77 percent of the average for all U.S. households. But the study said that "continuing improvements in educational attainment and employment opportunities will produce a steady narrowing of this income gap."

Between 2002 and 2020, household income is expected to grow by an average of 4.8 percent per year, 0.4 percent ahead of non-Hispanic income.

Total consumer spending by Hispanics was $531 billion last year. This represented $51,208 per household, or 81 percent of the national average.

From 2002 to 2020, the report projects personal consumption spending by Hispanics to increase at an average annual rate of 9.1 percent, "far exceeding the national growth rate of 6 percent."

"This is very good news for all the Spanish-language TV networks over the short and long terms," said James M. McNamara, president and chief executive officer of Hialeah, Fla.-based Telemundo Communications Group Inc., the NBC unit that is the country's second-largest Spanish-language television network. In a period when the general market is showing anemic growth, he added, the Hispanic market will be the most important subsector in the economy.

The study, commissioned by Telemundo, was carried out by Global Insight Inc., a Waltham, Mass.-based economic and financial forecasting firm. It cost "several hundred thousand dollars," the television executive said.

Global Insight went on to say that Hispanic employment has demonstrated resilience at a time of weak economic conditions.

"Employment of Hispanics has continued to grow during the current economic downturn," it said, with employment for this group standing about 3 percent higher than at the beginning of the recession in March 2001. In contrast, total U.S. employment "still has not regained the losses sustained in the recession," it added.

Global Insight used a variety of sources for its report, including updated figures from the U.S. Census, Bureau of Labor Statistics, National Income and Product Accounts, retail trade surveys, and other government and private sector databases.

Joseph Mann is a reporter for the South Florida Sun-Sentinel, a Tribune Publishing newspaper.

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