2018 multicultural economy outlook

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2018Multicultural

Economy Outlook


2018 Multicultural Economy OutlookExec SummaryU.S. Marketers are quickly shifting growth priorities among multicultural (MC) segments, especially since the White Non-Hispanic (WNH) segment has been declining since 2016. The MC economic outlook for 2018 looks remarkably powerful for several reasons:

• The Employment-Participation rate is higher than WNH and continues to step up, especially for Hispanics

• Unemployment rate is at record lows for all MC segments

• Personal Income has continued to increase for all MC segments while it has slowed down for WNH.

As a result, 100% of all new Upscale and 36% of new Affluent Households in the U.S. have come from MC segments, boosting the MC & LGBT’s economy at twice the rate of WNH to $4.6 Trillion in 2018 -equivalent to third place in the global economy, and next to China in buying power!

Despite the MC consumer spend strength and the segments' strong job participation, MC consumers’ confidence in their immediate personal finances has been softening, while WNH has been increasing. Most notably, MC consumers have been losing faith in their future economic wellbeing and the overall direction of the U.S. Economy; this is especially true among African Americans. In fact, even though the stock market is reaching record highs, MC consumers appear leery about entering financial markets. That said, they appear 40-50% more resolved than WNH in making investments to improve their homes, purchase new homes and even making durable goods purchases like autos and major electronics.

The bottom line is that, economic indicators suggest that Multicultural consumers are reaching a new normal in which they are uncertain about how policies may impact them in the long-run, yet their personal pocketbooks are healthy thus they plan to spend at leisure throughout 2018.

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The U.S. Is At a Major Important Inflection Point Marked as the WNH Segment Began Declining a Full Decade Prior to Census Projections;

Currently 100% of US Population Growth Generated from MC Segments

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Source of Growth 2014-15 vs 2015-16

(000’s)2,561.8

1,708.7

-853K-33%

100%

of U.S.

Growth

is MC

• WNH declined from a modest growth of 125K in 2015 to a small decline of 55K in 2016, the first decline

ever observed, but most notably, coming about one full decade earlier than Census projections

• Half (51%) of the US growth in 2016 came from Hispanics, up from 47% in 2015 and the Other/Mixed

Race segment generated 25% of the entire U.S. population growth

Source: SSG Analyses of American Community Survey (ACS 1-year estimate; 2014-2016), projection based on 2010-2016 growth rate

SEGMENT 2018ETotal Population 328.4 100%White NH 197.7 60%Multicultural 130.7 40%Hispanic 59.9 18%African American 40.4 12%Asian/NHPI 19.0 6%Other/Mixed Race 11.3 4%

2014-15 2015-16

13%

22%

13%

47%

5%

25%

17%17%

51%


Multicultural (MC) Employment-Population Ratio Continues To Rise Faster Than Total U.S. Population

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• Multicultural employment-population ratio has grown much faster than Total U.S since bouncing from the recession in 2011

• A higher share of Hispanics and Asians are employed than White NH

• Hispanic employment-population ratio is the highest of all segments, reaching 63% in 2017, 3 points higher than Total U.S.

• Changes since 2011:

• Total U.S.: 3.0%

• African Am.: 11.4%

• Hispanic: 6.5%

• Asian: 2.6%

* Includes some HispanicsSource: SSG analysis of Current Population Survey Monthly Employment-Population Ratio data 1975-2017

Employment-population ratio: Portion of the population that is employed. It measures the job holders and tracks the creation of jobs versus the adult population


MC Unemployment At Lowest Level Since Recession and Projected To Drop Further in 2018

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* 10-Month Average of Unemployed Population Jan-OctSource: SSG analysis of Current Population Survey Monthly Unemployment Data 2016-17 and Quarterly Full-Time Employment Data 2010-2017

• As of October 2017, MC unemployment rate was at the lowest level since the Great Recession for Hispanic, African American, and Asian segments

• The Hispanic unemployed population is projected to drop below 1.3 Million by 2018, a 16% decrease since 2016

• The AA unemployed population is projected to decrease by 278,000 from 2016 to 2018, a 17% decrease


Income Growth Has Been Increasing for All Multicultural Segments While Slowing for White NH

2015-16 Aggregate Income growth accelerated for all MC segments vs. previous periods, while the Aggregate Income growth for White Non-Hispanics has been slower and showed some deceleration• 13% among Hispanics• 11% for Asian/Other• 9% for African Americans

•

Source: SSG Analyses of American Consumer Survey (ACS 1-year estimate, 2013-2016)

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-13%decrease

Aggregate Income: Total Income of segment before

accounting for tax & Inflation


100% of All New Upscale Households and 36% of New Affluent Households Have Been From MC Segments

•There will be 637K new Upscale households (HHs) by 2018 -all of them Multicultural

•Multicultural upscale HHs are growing at a faster pace, while White NH have begun to decline

•There will be 3.4M new Affluent households by 2018, 35% of them will be Multicultural

•Affluent HHs: Compared to White NH households, Hispanics are growing 2x, African American 1.4x, and Asian/other 1.7x faster

Source: SSG Analyses of American Consumer Survey (ACS 1-year estimate; 2010,2014-2016)

HH Income $50-100K HH Income $100K or more

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Segment Upscale Affluent

White NH -0.3% 4.6%

Hispanic 3.9% 8.7%

African Am. 2.2% 6.5%

Asian/Other 2.1% 7.6%

Household Growth Rate(2010-2016)

White NH Hispanic African Am. Asian/other

Upscale Households:$50K-100K

Affluent Households:$100K or more


Diverse Segments Buying Power Will Continue to Expand Faster Than White NH, Reaching $4.7 Trillion in 2018

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Source: SSG analysis of Selig Center buying power statistics 2010 & 2016, Bloomberg.com – Witeck Communications study

Buying Power: Total disposable after-tax income available to spend on any goods and/or services

2.9%

5.4%

6.5%

3.6%

White Non-Hispanic Growth hRate

• MC buying power is growing notably faster than White NH’s 2.9% CAGRo Hispanic & Asian NH buying

power are the fastest growing, almost 2x faster than White NH for Hispanics, and 2.2x faster for Asian NH’s

• 2018 projected MC buying power stands at $3.7 Trillion plus $1 Trillion for LGBT

• Hispanic Buying Power is projected to surpass $1.5 Trillion in 2018, African American will reach $1.2 Trillion and Asian will almost reach $1 Trillion

Annual Growth Rate2010-2016

3.7%

**2015


Despite Their Significant Economic Progress, MC Consumer Confidence In the Present Has Declined Since Last Spring

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• Multicultural segments’ personal finances Consumer Confidence Now has been decreasing since Spring of 2016

• From Spring 16’ to Spring 17’ Confidence decreased:• 4.3% for overall M/C

• 5.0% for Asian/Other

• 4.4% for African Am.

• 3.3% for Hispanics

Source: SSG analysis of GfK MRI Spring & Fall data 2013-2017, University of Chicago GenForward Survey, FAU Hispanic Consumer Sentiment Index, & University of Michigan Index of Consumer Sentiment

Consumer Confidence Index NOW: The degree of optimism consumers feel about their personal finances & the country’s economy NOW vs. the last 12

months; indexing the difference between Better and Worse outlook


Most Notably, MC Consumers Have Been Losing Faith in the Future Direction of the Country, In Sharp Contrast to WNH’s

Rising Confidence

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• MC Consumer Confidence in their own, as well as the country’s, future has declined sharply since Fall 2015

• From Spring ‘16 to Spring ‘17 Future Confidence decreased: • 5.9% for overall M/C

• 8.5% for AA

• 6.5% for Asian/Other

• 2.6% for Hispanic

Consumer Confidence Index FUTURE: The degree of optimism consumers feel about their personal finances & the country’s economy in the next 12 months (FUTURE); indexing the difference between Better and Worse outlook

Source: SSG analysis of GfK MRI Spring & Fall data 2013-2017, University of Chicago GenForward Survey, FAU Hispanic Consumer Sentiment Index, & University of Michigan Index of Consumer Sentiment


Perhaps MC’s Growing Concern About the Future, May Be Affecting Their Plans to Invest in 2018 Financial Markets

Source: SSG analysis of GfK MRI data 2012-2017. Intent = Incidence of “Very Likely To Invest”.

2016 2017

• Overall Multicultural segments have been less likely to plan financial investments than White NH’s.

o This gap increased further from 2016-2017 among Hispanics and African Americans

• Asian/Other Segment shrunk the gap against White NH from 2016-2017

Index = MC SegmentWhite NH

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Measures the top box intent to invest in stocks, bonds, or mutual funds in the following next 12

months indexed against White NH


Nevertheless, MC Segments Feel Strongly About Investing In Their Homes, Showing 50% More Interest Than WNH In

Home Improvements and Home Purchases

Source: SSG analysis of GfK MRI data 2012-2017.

2016 2017

• All Multicultural segments widened their intent to remodel or purchase new homes from 2016-2017 vs. WNH

• African Americans have a higher intent for Home Improvement or Purchase for 2016 & 2017

• The likelihood for segments to invest in a home in 2017, compared to White NH’s:

o African Americans are 80% more likely

o Hispanics are 35% more likely to plan a remodel or home purchase

o Asians/Other are 29% more likely

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Measures the top box intent to make a home improvement/purchase in the next 12 mo.

indexed against White NH


• Intent to purchase durable goods among Multicultural segments is 38% higher than White NH

• Multicultural segments, especially African Americans and Asians/Other are more likely to plan to buy durable goods in next 12 months

• In 2017 compared to White NH:

• African Americans are 57% more likely to purchase durable goods such as appliances, TVs, computers or smartphones in the next 12 months

• Asians/Other are 45% more likely

• Hispanics are 21% more likely

MC Segments Will Continue to Drive Demand for Durable Goods, Showing Almost 40% More Interest Than WNH in

Major Purchases in 2018

Source: SSG analysis of GfK MRI data 2012-2017. Intent = Incidence of “Very Likely To Purchase”.

2016 2017Index = MC SegmentWhite NH

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Measures the top box intent to buy a vehicle, e-reader, tablet, home theater system, flat screen TV, video camera, blue-ray player, desktop/laptop computer, satellite radio,

smartphone among others in the next 12 mo. indexed against White NH


Concerns About Trump’s Effect on MC Consumers Have Decreased

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Multicultural and LGBT consumers have been much more concerned than the average American about the divisive social and racial discourse in current politics.

These hyper concerns contributed to a slowdown on MC growth, which was recorded by Nielsen and NPD- especially among Hispanic sales across some categories in Q1 and Q2 of 2017. More recently, in Q3 and Q4 2017, reports have indicated that MC growth resumed its typical rapid pace driving the overall growth of many categories.

Although MC consumer confidence in future finances dropped, Hispanic confidence in the present has bounced back in some recent polls and it still leads WNH.

MC consumers seem to have reached a new normal and MC spending in 2018 should be stronger, despite continued divisive rhetoric from the White House.

Source: SSG analysis of FAU Hispanic Consumer Sentiment Index, University of Chicago GenForward Survey & University of Michigan Index of Consumer Sentiment


Powerful Seamless Solutions

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Dávila Multicultural Insights - DMI -

counsels clients to capitalize on the

growing multicultural marketplace by

providing cross cultural marketing

strategies and positioning, market entry

guidance, business development and

brand positioning opportunities, while

helping to embed a diverse perspective

into all facets of their business/branding

processes.

Strategies and recommendations are

based on strong analytics that target MC

groups – with a deep subject matter

expertise in the Hispanic market, These

take into consideration acculturation

levels, age, language preference, country

of origin, among others.

DMI also helps clients put these strategies

into practice by serving as an extension of

clients’ teams. This work includes: media

and digital executions, leveraging

celebrity/digital influencers and

ambassadors, solidifying partnerships,

tactical executions, among others.

For 17 years, Santiago Solutions Group -

SSG- has guided strategic growth

roadmaps by uncovering ways to

reposition consumer motivations to

engage with, consider, and purchase

brands.

We rely on a set of proven analytical and

market research tools to precisely define

the size of the opportunity, needs and

reasons-to-believe through various tools

such as representative quantitative online

surveys, shopper studies, ethnos, IDIs, and

virtual focus groups.

These insights forge the solid foundation

for successful marketing and messaging

strategies aligned across Hispanic,

Multicultural, Gen Z, Millennial and Non-

Hispanic White segments.

SSG provides senior expertise in guiding

clients’ segmented marketing strategies

by leveraging analytics, econometrics,

planning, change management and go-

to-market solutions.

100% minority owned


Contact Information

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Santiago Solutions Group

818.509.5901

@Carlos_SSG

@Santiago_Group

[email protected]@SantiagoSolutionsGroup.com

[email protected]@davilami.com

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818.285.8729

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2018 multicultural economy outlook

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