October 26, 2001
Business in Hispanic Areas Proves
More Resilient Than Elsewhere
By EDUARDO PORTER
Staff Reporter of THE
Retail sales are down, consumer confidence is depressed, and most
economists agree the U.S. is in or near a recession. But at Ramirez Ford,
business is booming.
So far this year, the Ford dealership in Rio Grande City, Texas, a
dusty town about a mile from the Mexican border, has sold 1,102 cars and
trucks -- 145 more than during the same period last year. "We're about to run
out of inventory," co-owner Dan Ramirez says, adding that in the next few
months, he plans to open a DaimlerChrysler dealership next door.
Amid widespread reports of sagging consumer spending nationwide, business
in Hispanic enclaves like Rio Grande City -- where 96% of the population is
Latino -- is proving more resilient than elsewhere. "Recession?" asks Larry
Gonzalez, who heads the branches of Texas State Bank in Rio Grande City and
the rest of Star County. "It's not here at all."
Nor is the slowdown visibly apparent in the Cuban-American neighborhoods of
Miami or the Mexican-American enclaves of Southern California. "The
demographic trends are so favorable that they can't be squashed by the
negative cyclical force," says Jeffrey Humphreys, head of economic forecasting
at the University of Georgia's Terry College of Business in Athens, Ga. In
September, the unemployment rate among Hispanics ballooned to 6.4% from 5.6% a
year before. Nonetheless, the number of Latinos in jobs increased 155,000, as
more of them entered the labor force. At the same time, the U.S. economy as a
whole lost 129,000 jobs.
A population increase has fueled the Latino community's faster-than-average
income growth for years. During the past decade, Hispanic purchasing power
grew about twice as fast as the nation's disposable income, according to Mr.
Humphreys, reaching about $500 billion this year. That occurred as the
Hispanic population expanded more than four times as fast as the country's
overall growth. In addition, Hispanics, who are younger on average than the
overall U.S. population, are mainly in their highest-income-growth years.
Growth in numbers boosted the Latino market through the last recession. Mr.
Humphreys estimates that while the nation's disposable income fell in 1991,
Hispanic spending power grew by more than 2% in real terms.
For the first eight months of this year, before the terrorist attacks but
well after the economy had started slowing, the strength of Latino spending
could be seen clearly in the auto sector. Data from researchers R.L. Polk of
Southfield, Mich., show overall vehicle registrations in the U.S. fell 5.7%
for the first eight months of 2001 from the same period last year. Meanwhile,
Hispanic registrations were up 2.2%.
That isn't to say all Latino families are escaping the effect of the
economic slump. Since Sept. 11, tens of thousands have lost their jobs in the
hotel and restaurant sector alone.
However, with the exception of the hospitality industry, the low-end
service-sector jobs that are frequently held by Latinos have been less prone
to cuts. With more than one wage earner in each family, job cuts are less
likely to deprive Hispanic homes of all of their income.
It is hard to get an entirely accurate picture of Hispanic compared with
non-Hispanic spending, given the lag time of data. Food sales, which tend to
be less affected by slower economic growth, are showing little change both in
the Hispanic and non-Hispanic markets, according to market-tracking firm
Information Resources Inc. Research firm ACNielsen finds that while the
overall sales of the grocery stores that it tracks in Hispanic areas have
grown a little slower than in non-Hispanic stores, sales in Latino
neighborhoods are outperforming the general market for some items, like
perfume and cosmetics.
What is absolutely clear is that advertisers say the Hispanic market
remains promising. Ad spending on Spanish-language TV has grown in double
digits this year despite a drop in overall advertising, as companies try to
target Latinos. Analysts point to bits and pieces of evidence showing the
Hispanic market is faring better in the economic slowdown.
"In the retail sector, the weight of Latinos is growing in many
categories," says Isabel Valdes, a consultant on the Latino market who advises
such companies as ACNielsen, PepsiCo Inc. and Kraft Foods Inc. "Soft-drink
sales [to Hispanics] are growing like crazy," she points out.
Write to Eduardo Porter at
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