ATHENS, Ga. - American Indian buying power has more than doubled since 1990, and is projected to grow another 40 percent in the next five years, according to a new academic study.
However, despite an impressive total growth projection of 227 percent between 1990 and 2008, Native share of total buying power in the United States will barely budge, remaining below Native representation in the national mix, according to the Selig Center for Economic Growth at the Terry College of Business at the University of Georgia here.
That's because the booming population growth rates of American Indians and Alaska Natives will take up much of the growth in disposable income.
Nevertheless, according to the Selig Center, the after-tax incomes of minorities- American Indians, African Americans, Asians and Hispanics - "together wield formidable economic clout."
That 227 percent growth in buying power - a compound annual growth of 6.8 percent over 18 years, bests the Selig Center's projections for the country as a whole (148 percent), whites (128 percent) and African Americans (189 percent).
"Despite this fast-paced growth," Jeffrey M. Humphreys writes in an article in the Selig Center's quarterly Georgia Business and Economic Conditions, "Native Americans will account for only 0.6 percent of all U.S. buying power in 2008, up slightly from their 0.5 percent share in 1990."
The Center is projecting a 54 percent increase in Native population between 1990's 2 million and 2008's 3 million, a rapid rise in which Native share of the entire country's population will rise from 0.8 percent to 1 percent.
Native buying power - which the Selig Center defines as disposable or after-tax income - has risen from $19.3 billion in 1990 to $45.2 billion this year. In the article, "The multicultural economy 2003: America's minority buying power," Humphreys projects Native buying power to reach $63.1 billion in 2008.
According to the author, there are many factors in the growth of Indian buying power. "Perhaps the most important is gradually improving employment opportunities for all Americans. Added reinforcement comes from the fact that the Native American population is growing much more rapidly than the total population, and is expected to continue to do so."
Humphreys noted too the explosion of Indian entrepreneurs in recent years. He quotes a Census Bureau survey that showed "the number of American Indian-owned firms increased more than 12 times faster than the number of all U.S. firms, and their receipts rose four and one-half times faster than those of all firms."
Indian-owned businesses are found primarily in business services, personal services, and the construction industry, he wrote.
The biggest state markets for Native buying power measured by the Center were California ($7.4 billion), Oklahoma ($4.4 billion), Texas ($3.1 billion), New Mexico ($2.1 billion), North Carolina ($1.8 billion), Alaska ($1.7 billion), Washington ($1.7 billion), New York ($1.6 billion) and Florida ($1.3 billion).
"In 2003," according to the report, "the 10 states with the largest North American shares of total buying power include Alaska (9 percent), Oklahoma (5.3 percent), New Mexico (5 percent), South Dakota (3.3 percent), Montana (3.3 percent), North Dakota (2.5 percent), Arizona (2.1 percent), Wyoming (1.2 percent), Washington (0.9 percent), and Nevada (0.9 percent).
California's Native buying power is projected to reach $10.25 billion in 2008, still the largest. Oklahoma will be second, at $5.8 billion, and Texas third, at $5 billion. All told, 16 states will top $1 billion in Native buying power, according to the Center.
The combined buying power of Natives, Asians and African Americans will rise to $1.5 trillion in 2008, "14.3 percent of the nation's total buying power, up from 10.7 percent in 1990."
Humphreys pointed out "the market share claimed by a targeted group of consumers is important because the higher their market share, the lower average cost of reaching a potential buyer in the group."
The Selig center made its projections by using "national and regional econometrics models, univarate forecasting techniques, and date from various U.S. government services."