This new report unmasks the simple but powerful formula that lies behind the recent remarkable growth in Hispanic spending power. First, the number of Hispanic households has been growing faster than the number of non-Hispanic households. Second, average spending by Latino households has increased more than average spending by non-Hispanic households. These two basic variables (more rapid household growth + higher growth in average spending) add up to a higher rate of growth in aggregate spending by Latino households than non-Latino households in recent years.
As a result, Latino consumers have become the most important driver of growth in a wide variety of consumer expenditure categories. For example, between 2012 and 2015 increased spending by Latino households represented around 40% of the growth in aggregate spending for household equipment such as computers and telephones and 25% of the growth in aggregate consumer spending for new cars and trucks. Latino households accounted for double-digit shares of growth in aggregate expenditures for furniture (20%), major appliances (18%), audio-visual equipment and services (17%) and small appliances (16%).
The same phenomenon has occurred in the use of financial services. Over the past decade the percent of Hispanic individuals and households using a wide array of financial services has grown faster than it has among non-Hispanic consumers. As a result, Hispanic consumers have become a pillar of growth in the financial services industry. For example, between 2005 and 2015 growth in credit card use by Latinos grew 11 times faster than it did among non-Hispanics (44% vs. 4%). The 5.1 million additional Latinos with credit cards accounted for around half (49%) of the growth in the number of consumers using credit cards.