Today’s period of financial uncertainty prompts careful review of the factors that create prosperity in the United States’ economy. The most underrated and crucial of those factors is the working and buying power of the American Latino and Hispanic communities, especially during this time of recession.
Since the 1960s, the Hispanic and Latino population has steadily grown to become the largest minority group in the US. Reaching 18 percent of the US population in 2019, Latinos and Hispanics now account for 52 percent of all US population growth between 2010 and 2019.
The ethnic community contributes greatly to the US economy, in part because of the sheer amount of them living in the country. Vice President and General Manager of PepsiCo’s Hispanic Business Unit Esperanza Teasdale claims that if “all the Latinos in the United States were a country, they would have the eighth-largest GDP in the world.” GDP stands for “gross domestic product” and is a measure of the value created through the generation of goods and services in a country during a specific time period. The Latino GDP would be larger than the GDPs of Italy, Brazil, or South Korea, as evidenced by their economic output of $2.6 trillion in 2018. US Latinos have one of the fastest-growing GDPs in the world, and their purchasing power is increasing 70 percent faster than any other non-Latino, reaching a $1.5 trillion total in 2020.
This immense buying power can be explained by many facets of the ethnic community’s culture, Teasdale explains. “A lot of this is driven by the fact that their households tend to be larger because of a multi-generational dynamic, where moms and dads and grandparents all live in the same house.” This, coupled with many elements of consumerism in their culture, prompts the average Latino to purchase more than non-Latinos.
It’s evident that if companies and markets want to profit from this buying power, they’re going to have to begin appealing to a Latin audience. As it stands, “US Latino consumers outspent non-Latino consumers per capita in 12 of the 16 primary (FMCG) fast-moving consumer goods landscape” (Hamilton, Fienup, Hayes-Bautista, and Hsu). With prominent holdings in film, food, clothing, and other industries, much of a company’s product output is going towards a Hispanic or Latino household. Corporations like PepsiCo have begun creating Hispanic-specific marketing initiatives to appeal to this ever-growing demographic.
The power of Latinos and Hispanics extends beyond purchases and GDP. They are now the forces behind the new job and business growth in the United States, launching 86 percent of new US businesses within the past decade and running 4.37 million businesses nationwide. An increasing amount of Hispanics and Latinos are pursuing their education; the increase in college enrollment is now higher amongst Latinos than any other race or ethnicity. They are diligent employees, accounting for 82 percent of the US labor-force participation in the past decade.
These tremendous impacts on the economy won’t slow down any time soon. As Latinos are one of the youngest US racial or ethnic groups at a median age of 30, their population trend will continue to rise, meaning more workers and long-term contributions to the economy.
The critical inputs and outputs of the community only serve to add a new facet to what it means to be Latino or Hispanic: being part of the driving force behind one of the most important economies in the world.