In 2004, black buying power rose to $723 billion, up from $585 billion in 2000, according to The Multicultural Economy 2004, a report by The Selig Center for Economic Growth. The report defines buying power as the total personal income available to individuals after taxes, for spending on goods and services. By 2009, the report projects that blacks will have $965 billion in buying power, up 203% since 1990.
In comparison, Asians and American Indians will have $528 billion and $66 billion in buying power in 2009, up 347% and 240%, respectively. Hispanics are expected to increase their buying power by 347.1% to $992 billion, becoming second to whites. Hispanics are not a race but rather an ethnic group and are represented in the data separately for that reason. According to the U.S. Census, 47.9% of Hispanics consider themselves to be white, 2% consider themselves black, 1.2% identify as American Indian, 0.3% as Asian, and 48.6% consider themselves to be other or of mixed race.
“If the African American market is getting bigger, then there are opportunities for people in the community to start or grow their businesses if they feel that they would be well positioned or better positioned than others to sell to this market,” says Margaret C. Simms, vice president of governance and economic affairs for the Joint Center for Political and Economic Studies.
The report found that blacks spend more money on telephone services, shoes, personal care products, and children’s apparel and less on healthcare, reading materials, entertainment, and household textiles, compared to other groups.
Although buying power is increasing in the African American community, experts say consumers should not mistake that statistic for a sign that the community is becoming wealthier.
“Those who are not familiar with these definitions look at the increase in income and they say ‘Well, the African American community is wealthier,’”says Bernard E. Anderson, professor of management at the Wharton School of the University of Pennsylvania. “It doesn’t mean that at all. In fact, to the extent that African Americans spend more of their increased income rather than save and invest it, in many cases, their wealth might even decline in light of the increase in their income.”
“The African American community historically has spent more than it has held,” says Cheryl Hill Lee, a research analyst for the National Urban League Institute for Opportunity and Equality. “What needs to change is that African American wealth figures need to go up