AFRICAN AMERICAN ECONOMIC GROWTH

Blk History Mo is a celebration of Blk Buyers & Blk Bizes. We shall briefly tackle Blk Buying Power while also considering Blk Consumer Expenditures. Then, we shall take a look at Blk Biz formation using the Census Bureau’s just released in Dec Biz Owner Survey of 2012. Using this study, we shall compare Blk Biz growth in both an absolute sense AND in a relative sense (ie vs other minorities) In some instances we shall include Hispanic and Female data b/c both are well represented in the pre-election debating platform and increasingly have become important to American biz ownership.

 

BLACK BUYING POWER

 

US Blk Buying Power (BP) has increased from $320M in 1990 to $1.2T in 2015 (+275%). This growth far outstrips the growth of Total Buying Power of the US (+213%) and the buying power of Whites (+191%). From 2000-2015 Total Buying Power in the US increased 81.3% while Whites showed an increase of 74.3%. Blks increased by 91.3%. With 17% of the US population Hispanic Buying Power has grown by 526.6% since 1990. B/T 2000 and 2015, Hispanic Buying Power has grown by an amazing 167.1% and it is now at a remarkable $1.322 T.

 

According to Selig Center, Michigan is the 9th most populous state (9.878 M) in the US with the 12th biggest Blk population (1.408 M). MI has the 11th biggest Buying Power in the US with a BP of $365.536 B. Blks rank #14 with a BP of $33.716B. (MI’s Hispanic population is ONLY 484,146 or 4.9% of MI’s population. That ranks 18th in the US. The BP of MI Hispanics is $10.122B and is ranked #19 in the US).

 

As for Blk Spending Patterns (2014 Consumer Expenditure Survey) we found that:

 


  • Blks spend more % wise on HOUSING than non-Blks. (0% vs 33.0%) Their % spending is especially strong on SHELTER and UTILITIES vs that of non-Blks .

 

  • Blks spend more % wise on APPAREL & SERVICES than do non-Blks (3% vs 3.1%).

 

  • Blks spend more % wise on OIL AND GAS than do non-Blks (6% vs 4.9%).

 

  • Blks spend more % wise on PERSONAL CARE PRODUCTS than do non-Blks (4% vs 1.1%).

 

  • Blks spend more % wise on OTHER VEHICLE EXPENSES (finance charges, maintenance, insurance) then non-Blks do (0% vs 5.0%).

 

  • Blks spend more % wise on FOOD AT HOME than non-Blks (6% vs 7.6%).

 

  • Blks spend less % wise on FOOD “AWAY FROM HOME” than do non-Blks (7% vs 5.2%).

 

  • Blks spend less % wise on ALCOHOLIC BEVERAGES than do non-Blks (.6% vs .9%).

 

  • Blks spend less % wise on HEALTH CARE than do non-Blks (8% vs 7.7%).

 

  • Blks spend less % wise on ENTERTAINMENT than do non-Blks (3% vs 5.0%).

 

  • Blks spend less % wise on INSURANCE PENSIONS than do non-Blks (0% vs 10.9%).

 

  • Blks spend less % wise on TOBACCO than do non-Blks (9% vs 2.2%)

 

 

Under pinning Blk’s Buying Power is the fact that Blks (over 25 yrs) are better educated today with a 85% high school grad rate (vs the 66% in 1990 and the 79% in 2000). Similarly by 2014, 22% were college grads (vs 17% in 2000 with ONLY 11% of them being college grads in 1990). To the benefit of the entire nation the diversity of the Blk population is COUNTRYWIDE and NOT housed in a few states or a few regions of the US. Blks spend more than nonBlks on AUTO INSURANCE, CHILDREN’S APPAREL, ELECTRICITY and PHONE SERVICES. They also spend less on FURNITURE, ENTERTAINMENT, HEALTH CARE, NEW CARS and PENSIONS & SOCIAL SECURITY. Savvy marketers MUST make great deals for those products/services so that Blks  will continue to buy more than nonBlks. For products/services where Blks spend less, retailers must make items more appealing.

BLK BIZ OWNERSHIP

 

Table 1: BLACK BIZES IN AMERICA GIVEN ALL FIRM AND PUBLICLY TRADED FIRMS TOO
  Number   Receipts  
  2007 2012   2007 2012  
             
All Firms 27,092,908 27,626,360 +1.97% $30.03T $33.54T +11.67%
Publicly Traded 798,048 446,980 -43.89% $19.08T $21.57T +13.05%

 

 

Table 2: FIRMS BY RACE AND MINORITY CLASSIFICATION
  Number   Receipts  
  2007 2012   2007 2012  
All Firms (Private) 26,294,860 27,179,380 +3.36% $10.94T $11.96T +9.27%
White Firms 22,595,146 21,539,858 -4.67% $10.24T $10.95T +6.93%
Black Firms 1,921,864 2,584,403 +34.47% $135.74B $150.20B +10.66%
Asian Firms 1,549,559 1,919,902 +23.77% $506.04B $699.49B +38.23%
Hispanic Firms 2,260,269 3,305,873 +46.26% $305.66B $473.64B +54.95%
Female Firms 7,792,115 9,878,397 +26.78% $1.19T $1.41T +18.65%

 

Table 1 shows that private bizes are 98.4% of ALL US bizes. Publicly traded (PT) bizes therefore, are ONLY 1.6% of ALL bizes. Given that gigantic imbalance b/t PT & private bizes, we find it amazing that this 1.6% of bizes is responsible for 64% of all receipts. WOW! What is even more surprising however, is that there is almost 44% fewer PT firms in 2012 than in 2007 & yet, their receipts increased by 13%. WOW! (Private bizes increased by 11 2/3%)

SUMMARY

B/C its Blk History Mo, Buying Power & Biz Ownership of African Americans are honored.

ü      Blk Buying Power has grown from $320.4B in 1990 to $1,163.5 T in 2015 (+263%) while the entire US’s  buying power has ONLY grown by 213% during that time period.

 

ü      As far as Blk Biz going and growing, in 2007 there were 922M Blk Bizes vs 2,584 B in 2012 with a growth of +34%. During that same time the US Biz Owners only grew by 3.4%.

 

ü      The aforementioned Blk Bizes grew receipts from $135.7 B in 2007 to $150.2 B in 2012 with growth of 10.7%. At the same time all US bizes grew receipts by 9.3%.

 

In sum Blk Buying Power & Blk Biz Owners have grown more quickly corresponding buying power and biz ownership for the country as a whole.

 

Table 2 EXCLUDES PT data therefore there are 27,179,380 firms with $11.96 T of receipts in ‘12. The number of Black Firms has increased almost 34½% from ‘07 to ‘12 & they grew in receipts by 10 2/3%. America’s Black Biz have become well engaged. CONGRATS TO ALL! YOUR $UCCE$$ $PEAK$ TO HARD WORK & BIZ EXPERTISE! (Table 2 includes Asian, Hispanic & Women owned firms b/c of the recent Oscar criticism of lack of diversity AND the fact that the US has a strong possibility of having a Hispanic and/or woman pres candidate. The Asians are included b/c of their great biz success.)

 

 

 

 

 

 

 

 

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About bernacmd

For over 24 years, University of Detroit Mercy Marketing Professor Michael Bernacchi, Ph.D., J.D, has produced "uNDER tHE mIKE-rOSCOPE", a newsletter discussing current "marketing and advertising¹s bends, trends & ends." A well-know fixture in Detroit and national media, UDM's marketing guru has made several appearances on CNN's "Talk Back Live," the Voice of America worldwide radio network (VOA), ABC, CBS, NBC, MSNBC and on the pages of Sports Illustrated, Time, TV Guide, the New York Times, USA Today, the Wall Street Journal and the Washington Post, to name a few. At University of Detroit Mercy, he has taught courses in Marketing Management, Consumer Behavior, Marketing Communications, Research and Corporate Social Responsibility and Sports and Entertainment Marketing. Michael Bernacchi can be reached at 313-993-1116 or bernacmd@udmercy.edu. Please appropriately attribute the following for their work on uNDER tHE mIKE-rOSCOPE: Yen Ju Lee Robert Rouse Vidhyasagar Natarajan Eric Baumgardner & Ian Young
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