VOLUME 66, NUMBER 3 • THE UNIVERSITY OF GEORGIA • THIRD QUARTER 2006 The multicultural economy 2006Jeffrey M. Humphreys Backed by fundamentally strong national and regional economies, U.S. consumers will continue to have substantial but varying annual gains in after-tax income, which powers their spending on goods and ser-vices. The Selig Center’s estimates and projec-tions of buying power for 1990-2011 show that minorities--African Americans, Asians, Native Americans, and Hispanics--definitely share in this success, and together wield formidable economic clout. The numbers are impressive. In fact, both the African-American and the Hispanic consumer markets already are larger than the entire economies (GDP measured in U.S. dollars) of all but nine countries in the world. The buying power data presented here and differences in spending by race and/or ethnicity suggest that as the U.S. consumer market becomes more diverse, advertising, prod-ucts, and media must be tailored to each market segment. With this in mind, entrepreneurs, established businesses, marketing specialists, economic development organizations, and chambers of commerce now seek estimates of the buying power of the nation’s major racial and ethnic minority groups. Going beyond the intuitive approaches often used, the Selig Center’s estimates provide a timely, cost-efficient, and quanti-tative way to assess the size and vitality of the national, state, and sub-state racial and ethnic markets. This study provides a comprehensive statistical overview of the buying power of African Americans, Asians, Native Americans, and Hispanics for the U.S. and all the states. [Researchers should note that multiracial buying power is estimated only as a residual, and therefore the estimates are not discussed and should be used very cautiously.] Simply defined, buying power is the total personal income of residents that is available, after taxes, for spending on virtually everything that they buy, but it does not include dollars that are borrowed or that were saved in previous years. It is not a measure of wealth, and it does not include what tourists spend during their visits. Unfortunately, there are no geographically precise surveys of annual expenditures and income of all the nation’s major racial and ethnic groups. Even estimates of expenditures by race or ethnicity are difficult to find, especially for individual states and counties.The Selig Center addresses this problem by providing es-timates of African American, Native American, Asian, White, Hispanic, and non-Hispanic buying power from 1990-2006 for the nation, the fifty states, and the District of Columbia. Also, five-year projections (2007-2011) are provided for all groups. Estimates for Georgia’s metropolitan areas and coun-ties and for Florida’s metropolitan areas and counties also are included. These current dollar (unadjusted for inflation) estimates and projections indicate the growing economic power of various racial or ethnic groups; measure the rela-tive vitality of geographic markets; help to judge business opportunities for start-ups or expansions; gauge a business’s annual sales growth against potential market increases; indi-2Georgia Business and Economic ConditionsGEORGIA BUSINESS AND ECONOMIC CONDITIONSThird Quarter 2006 Volume 66, number 3SELIG CENTER FOR ECONOMIC GROWTHP. George Benson Dean Jeffrey M. HumphreysDirectorLorena M. Akioka Editor Beata D. KochutResearch ProfessionalIan ArmitData Management SpecialistGEORGIA BUSINESS AND ECONOMIC CONDITIONS (ISSN 0297-3857) is published quarterly by the Selig Center for Economic Growth, Terry College of Business, The Univer-sity of Georgia, as a service to the business and academic communities. Signed articles reflect the author’s opinion but not necessarily those of the Selig Center for Economic Growth, Terry College of Business , or The University of Georgia. This publication is sent free of charge upon request.Postmaster send address changes to: Selig Center for Economic Growth, Terry College of Business, The University of Georgia, Athens, GA 30602-6269.Periodicals postage paid at Athens, Georgiacate the market potential of new and existing products; and help to guide targeted advertising campaigns. The estimates for 1990-2005 supersede those previously published by the Selig Center. The revised data for those years, as well as the preliminary estimates for 2006-2011, should be considered only as the first step toward a more comprehensive analysis of the market. Anyone considering the investment of substantial capital in a new enterprise, a new product line, or a new advertising campaign will need extensive feasibility analysis to determine market opportuni-ties more precisely.Total Buying Power StatisticsThe Selig Center projects that the nation’s total buying power will rise from $4.3 trillion in 1990 to $7.2 trillion in 2000, to $9.5 trillion in 2006, and to $12.4 trillion in 2011. The percentage increase for 1990-2011 is 190 percent, which far outstrips cumulative inflation. (For example, the U.S. Consumer Price Index for All Urban Consumers (CPI-U) will increase by approximately 74 percent during the same period.) From 1990-2006, total buying power will rise by 123 percent and the consumer price index will rise by 54 percent. Total buying power will expand by 33 percent from 2000 through 2006, and by 30 percent from 2006 through 2011. By comparison, the percentage change in the consumer price index for 2000-2006 and for 2006-2011 will be 17 percent and 13 percent, respectively.Diverse forces support this substantial growth. The 22-year span encompasses a mild recession in 1990-91, the longest economic expansion in the nation’s history from 1991-2000, and another mild recession in 2001. As this is written, GDP again is expanding and the baseline assumption calls for moderate growth through 2011. Although U.S. buying power will grow, the state-level buying power estimates show an uneven expansion. Buying power is rising much faster in the Mountain and Southern states than in the Middle Atlantic and Central states. Ranked by percentage change in total buying power between 1990 and 2006, the top ten states are Nevada (281 percent), Arizona (211 percent), Colorado (193 percent), Utah (189 percent), Idaho (172 percent), Texas (170 percent), Georgia (163