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Release Date: Thursday, August 14, 2003

BUYING POWER OF U.S. MINORITY HOUSEHOLDS INCREASING FASTER THAN WHITE HOUSEHOLDS, ACCORDING TO UNIVERSITY OF GEORGIA'S SELIG CENTER

WRITER: Jim Kvicala, 706-583-0931, email
CONTACT: Jeff Humphreys, 404-425-2962, email

ATLANTA, Ga. — The amount of disposable income controlled by minority households continues to grow faster than that of white households, according to a report released today by the Selig Center for Economic Growth in the University of Georgia's Terry College of Business.

The report shows substantial gains in after-tax income among African Americans, Hispanics, Asian Americans and Native Americans, thanks to fundamentally strong national and regional economies that have benefited most U.S. consumers since 1990.

It also forecasts continued rapid growth in total buying power over the next five years for the nation's largest racial and ethnic minority groups, thanks to both population growth and better employment opportunities.

"In sheer dollar power, the economic clout of the nation's minorities - Hispanics in particular - is formidable," said Jeff Humphreys, Selig Center director and author of the report.

Interesting revelations from this year's Minority Buying Power report include:

• By 2008, the combined buying power of African Americans, Asian Americans and Native Americans will exceed $1.5 trillion, more than triple the 1990 level of $456 billion. That's a gain of $1.1 trillion, or 231 percent.
• California is the top-ranked state in terms of total buying power for every minority group except African Americans (California is number two in that category; New York is number one).
• California is the top-ranked state in terms of total buying power for every minority group except African Americans (California is number two in that category; New York is number one).
• Based on its size, growth rate and concentration, Georgia remains the nation's most attractive African American consumer market. It's the fourth largest and the sixth-fastest growing. One out of every five consumer dollars spent in Georgia is controlled by African Americans.
• Even as minority buying power leads in growth rate, white households control a large majority of the nation's total buying power. The combined buying power of African Americans, Asian Americans and Native Americans is projected to account for 14.3 percent of total U.S. buying power by 2008.

Buying power, also referred to as disposable income, is the total personal income available for spending on goods and services after taxes. Humphreys said the fast-paced growth of minority buying power is significant because the market share claimed by a targeted group of consumers directly affects the costs of providing goods and services. The higher the market share, the lower the cost of reaching a potential buyer in that group, he said. Seeking better ways to service the market segments represented by minority households should be a strategic priority for 21st century American business leaders.

"For example, by 2005, Hispanic buying power will exceed that of African American buying power for the first time," said Humphreys. "Within the next two years, Hispanic markets will become the nation's largest minority market, and that lead will widen with each passing year."

"The Multicultural Economy: Minority Buying Power in the New Century" is the latest in a series of state-by-state studies of minority buying power Humphreys has conducted since 1990. Initially limited to African Americans, he expanded the series to include the nation's four most populous minority groups. The report estimates buying power by applying economic modeling and forecasting techniques to data from various U.S. government sources. The model developed by the Selig Center integrates statistical methods used in economic forecasting with those of marketing research.

In addition to the state-by-state breakdowns, the 2003 report also breaks down minority buying power on a county-by-county basis and by Metropolitan Statistical Areas (MSAs) for Georgia and Florida. In comparison, the U.S. Bureau of Labor Statistics annually publishes only national and regional estimates on what consumers purchased in the previous year, without any year-to-year perspectives or projections.

The Selig Center for Economic Growth was established in 1990 in memory of Atlanta entrepreneur Simon S. Selig Jr., a 1935 Terry College graduate, by his son, Steve Selig, and daughter, Cathy Selig, both of Atlanta. The Selig Center is responsible for the college's annual "Georgia Economic Outlook" forecast and produces commissioned studies for the state and the private sector.

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CONTACT INFORMATION

Office of Marketing and Communications
Terry College of Business
University of Georgia
Athens, GA 30602
706-583-0009

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