The number of affluent African-American households has risen drastically, increasing the buying power of the African-American demographic.
New research from Packaged Facts has revealed that African-American buying power has grown rapidly over the past five years.
The new African-Americans: Demographic and Consumer Spending Trends, 10th Edition from Packaged Facts has revealed that African-American buying power has topped $1 trillion over the past five years. Packaged Facts has found that between 2010 and 2015 African-American buying power grew from $995 billion to $1.3 trillion for cumulative growth of 27%. Looking ahead, Packaged Facts forecasts cumulative growth of 16% between 2015-2020.
The rise of affluent households has helped bolster African-American buying power. Between 2005 and 2014 the number of African-American households with an income of $100,000 or more jumped 83%, from 1.1 million to around two million. Comparatively, the total number of American households in the $100,000+ income bracket grew only 53%. Likewise, the number of black households with incomes ranging between $75,000 and $100,000 increased by 25%. As the two-tier economy continues to reach into all demographic segments, it is likely that the buying power of affluent black households will continue to grow at a relatively rapid pace, finds Packaged Facts.
For the U.S. economy overall, the trickledown effect of this swelling prosperity has seen consumer expenditures by the average African-American household grow faster than consumer spending by other households (26% versus 23%). Dining out is one area where African-Americans are spending more of their money. Packaged Facts estimates that the amount black households spent in 2015 on food away from home was 14% higher than in 2012, while expenditures on food at home increased only 5%. Similarly, purchases on apparel, personal care products (especially fragrances), home furnishings, appliances (both major and minor), and home improvement/remodeling also boomed.
African-American consumers played a major role in the rush to auto dealers’ showrooms that occurred between 2012 and 2015. During this time period, spending by American consumers on automotive vehicles grew by $126 billion, or 36%.
Higher-income African-Americans outspend the total population on “future-oriented” expenditures such as life, endowment, annuity, and other personal insurance, as well as contributions to pensions and Social Security. Packaged Facts also found that higher-income black consumers present a major opportunity for financial firms. Over the past decade, the percent of higher-income African-American households holding nay form of financial investment has trended upward from 36% to 44%.