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Release Date: Wednesday, August 4, 2004

U.S. MINORITIES SPENDING MORE ON EATING OUT AND ENTERTAINMENT AS BUYING POWER INCREASES, SAYS UNIVERSITY OF GEORGIA'S SELIG CENTER

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

ATHENS, Ga. — African American and Hispanic households are devoting a larger share of their discretionary income to eating out in restaurants and entertainment, in part the result of increasing buying power for the largest U.S. minority groups.

A report on minority buying power released today by the Selig Center for Economic Growth at the University of Georgia's Terry College of Business also projects disposable income controlled by minorities will continue growing at a faster rate than that of white households at least through 2009.

Buying power, also referred to as disposable income, is the total personal income available for spending on goods and services after taxes.

As the buying power of African American and Hispanics has increased over the past several years, these groups have spent more on dining out and a wide range of entertainment expenses, from pets and event tickets to home entertainment equipment, said Jeff Humphreys, Selig Center director and the report's author.

Humphreys' observation is based on the most recent data on minority buying patterns available from the U.S. Bureau of Labor Statistics. Between the years 1997 and 2002, African American households increased annual spending on entertainment by 28.9 percent (from an average of $872 to $1,124), while Hispanic households boosted their yearly entertainment budgets by 23.9 percent (from an average of $1,137 to $1,409).

Spending on eating away from home in African American households increased by 43.6 percent (from an average of $1,056 to $1,517 a year) over the same five-year period, with Hispanic households increasing spending at restaurants by 34.3 percent (from an average of $1,506 to $2,023 a year).

Though the average white household still spends more than the average minority household, minorities appear to be closing the gap in terms of the percentage of total expenditures allotted to entertainment and restaurant spending. For example, Hispanic spending on entertainment from 1997-2002 increased from a 3.3 to a 4.1 percent share of expenditures, while non-Hispanic households retrenched from 5.4 to 5.2 percent over the same period.

With a birth rate exceeding the national average and improving employment opportunities, African Americans, Hispanics, Asians and Native Americans should all experience above-average growth in buying power over the next five years, 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 cost of providing goods and services. The higher the market share, the lower the cost of reaching a potential buyer in that group, he said.

"The buying power of African Americans, Hispanics, Asians, and Native Americans is energizing the U.S. consumer market as never before. Today, African-Americans have $723 billion in spending power, and Hispanics have $686 billion. These groups' economic clout is surging, and it is reshaping the commercial and retail landscape of America," Humphreys said.

The same increases in buying power that give minorities the muscle to reshape the retail marketplace to service their needs, of course, will eventually allow them to reshape the political landscape. "Ultimately, economic power begets political power," Humphreys said.

Humphreys is the author of "The Multicultural Economy: Minority Buying Power in the New Century," a series of state-by-state studies of minority buying power he began in 1990.

Interesting insights from this year's report include:

• By 2009, 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 almost $1.1 trillion or 242 percent.
• Asian American buying power is estimated at $363 billion for 2004, an increase of 207 percent since 1990. It's forecast to reach $528 billion nationwide by 2009.
• California is the top-ranked state in terms of total buying power for every minority group except African Americans. (California is second in that category; New York is ranked first.)
• Hispanic buying power in California for 2004 is an estimated $198.5 billion -- far exceeding second-ranked Texas ($119.3 billion). On its own, California's Hispanic buying power exceeds the total buying power (all groups) of 37 of the 50 states.
• 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.
• Native American buying power, estimated at $48 billion nationwide for 2004, is growing fastest in West Virginia, where Native American buying power grew 320 percent between 1990 and 2004.

Initially limited to African Americans, Humphreys eventually expanded his studies on minority buying power to include the nation's most populous racial groups, as well as Hispanics, who are categorized by the U.S. Census as an ethnic group and not a racial minority. "The Multicultural Economy" estimates minority 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 2004 report also breaks down minority buying power in Georgia and Florida on a county-by-county basis and by Metropolitan Statistical Areas (MSAs). 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 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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