Blacks’ Buying Power Hits All-Time High: Where the Money Goes

A recent report noted that the purchasing power of African Americans has  increased from $957.3 billion in 2010 to an expected $1.1 trillion by 2015. The data, which was collected and released by the State of the African-American Consumer Report reflects positive growth in blacks’ disposable income. This is a good thing for many, but the unfortunate truth is behind the numbers for this increase has not translated into more money circulating within the African American community.

As our economic power increases collectively, we continue to spend a significant amount of income with African American businesses. According to the University of Georgia’s Selig Center for Economic Growth, a dollar circulates zero to one times within the black community, compared to the more than six times it circulates in the Latino community, nine times in the Asian community and unlimited amount of times within the white community,

Even more astounding about this observation is that from 2002 and 2007, the number of  African American businesses grew by 60.5 percent to 1.9 million, (the fastest growing segment of the economy, according to U.S. Census data). However, although these companies employed 921,032 people, 0.8 percent of total employment, and generated $137.5 billion in receipts, they only account for 0.5 percent of all receipts, according to U.S. Census.

Other findings presented in the State of the African-American Consumer Report note that African American males make more shopping trips than all other groups, but spend less money per trip, even though African Americans spend more for consumer products than other ethnic groups. African American consumers lead in the purchase of entertainment items, electronic equipment and a host of other consumer products including hair care, on which we spend a reported $7.8 billion annually.

Although as a community we have purchasing power of almost $1 trillion annually, we still have a belief orientation that in behavior, suggests a negative view of African American owned businesses. The main problem is that we do not own or make more investments in non-disposable goods, life insurance or things that incur equity.  This may be a function of not having a broad and strong understanding of financial issues as Asian or white communities.  Lastly we tend to focus more on getting and finding a job as opposed to entrepreneurship.

Whatever the case, African Americans have the money in our community — the problem is that we don’t’ keep it there and support our own kind. –torrance stephens