- The U.S. Latino economy is growing at more than twice the rate of the non-Latino economy, contributing heavily to national GDP growth.
- Latino income, purchasing power, and consumption are rising rapidly, making this demographic pivotal for domestic business and international trade.
- If it were its own country, the U.S. Latino economy would rank 5th largest in the world, with massive influence in states like California, Texas, and Florida.
- Educational attainment is fueling productivity gains that enable the Latino economy's impressive expansion across diverse industries.
The Vast and Growing Influence of Latino Workers and Consumers
The latest data reveals that the U.S. Latino economy continues to expand at a remarkable clip, outpacing nearly all other demographic groups. Between 2011 and 2021, Latino income grew at a 4.7% annualized rate, more than double the 1.9% rate for non-Latinos. Similarly, Latino consumption expanded at 4% annually, again about twice as fast as for non-Latinos. This pattern holds for purchasing power as well.
Such rapid growth cements Latinos as the consumer engine powering the broader U.S. economy. Their outsized role as purchasers ripples across countless industries, from retail to automobiles to technology and beyond. Business leaders must understand this cohort and cater to its needs to find success in the years ahead.
Zooming out, if U.S. Latinos comprised their own country, their $3.2 trillion GDP would constitute the 5th largest economy globally. From 2011 to 2021, the Latino economy was the 3rd fastest growing worldwide, trailing only China and India. This remarkable expansion showcases how Latino workers and entrepreneurs are playing an integral part in America's economic leadership on the global stage.
Within the U.S., certain states are seeing an especially pronounced Latino impact. For instance, the California Latino economy alone stands at $682 billion, which would rank it as the 21st largest country in the world. Texas and Florida also host massive Latino economies nearing half a trillion dollars each. Businesses hoping to thrive in these states must tap into the Latino demographic.
Diverse Industries Benefiting from Latino Progress
It would be a mistake to pigeonhole Latino economic influence into just a few industries like hospitality or agriculture. The data reveals impressive diversity.
Public administration tops the list at over $400 billion in value added by Latinos. But manufacturing, real estate, healthcare, wholesale trade, and construction all also benefit enormously as well. This wide distribution demonstrates how Latino income gains and consumption power spread across the full spectrum of the U.S. economy.
Mirroring the industry diversity, Latino income sources fueling economic expansion are varied. Wages and salaries unsurprisingly make up the largest share at $1.67 trillion. However, Latino proprietors’ income and production/income taxes also contribute heavily at over $200 billion each. Even investment income categories like dividends and interest are rising rapidly for U.S. Latinos.
In short, Latino economic gains boost national prosperity across contexts from Wall Street to Main Street. Business leaders and policymakers should take notice.
The Promise of Latino Productivity
What explains the Latino economy's impressive outperformance? Demographic growth through immigration and birth rates contributes somewhat. But the primary driver is productivity gains stemming from major educational progress.
Over the past decade, Latino high school graduation rates have increased substantially. College attendance and completion have risen as well, albeit from a low base. Critically, each new generation attains more education than the one before across metrics like high school, college, and postgraduate degrees.
This trend bodes well for continued Latino income, productivity, and consumption growth. A more educated workforce directly enables higher incomes and greater economic output. It also leads to savvier financial decision making regarding matters like saving, investing, and leveraging credit.
There is still plenty of room for further educational gains. College completion rates for Latinos still lag other groups significantly. So progress on this front can unleash even higher productivity and purchasing power. The bottom line? The economic promise of Latinos is bright, and increased attainment will help realize it.
Leaders across sectors should track and encourage Latino advancement. It will lift individuals, communities, and the nation as a whole.