Researchers, public officials and business leaders took part in
a conference Wednesday at the Anderson School of Management to
discuss the school’s latest forecast that the U.S. economy
will continue to experience slow economic growth through 2006.
The national economy continues to gradually decelerate, or
“glide,” toward slower growth, though not as
drastically as once thought, said Anderson Forecast Senior
Economist Michael Bazdarich.
Although there have not yet been substantial declines in U.S.
housing construction, as the group predicted three months ago, the
forecast expects these declines to develop in the near future.
The state of California’s economy mirrored that of the
nation and was described as “mediocre” by Anderson
Forecast Senior Economist Christopher Thornberg.
Likewise, the Los Angeles area is expected to follow the
economic “soft landing” of the state by slowly
declining, and avoid a precipitous crash or full-blown recession.
The theme of the conference then shifted to address the growing
impact of Hispanics on the California economy.
The forecast group cautioned that any bursting of the housing
bubble would disproportionately and adversely affect Hispanics,
since more than 71 percent of those who work in construction and 83
percent of those in maintenance occupations are Hispanics.
Los Angeles mayor and UCLA alumnus Antonio Villaraigosa, the
first Latino mayor of Los Angeles since 1872, spoke at the
conference.
Immigrants represent the heart and soul of the United States,
Villaraigosa said.
“America was not built by people with trust funds,”
but by the labor and hard work of immigrants, he said.
Noting the aging of the Baby Boomer generation and the need for
more workers to keep Social Security afloat, the mayor said that
the future of America will depend on immigrants coming to work in
the U.S.
“We will not succeed if immigrants do not succeed,”
he said.
The mayor sees the futures of the United States and Latinos as
intertwined.
“The Latino agenda is the American agenda,”
Villaraigosa said.
As immigration from Latin American continues in the U.S., so
does the economic impact these immigrants have on the
nation’s economy.
The purchasing power of Latinos has grown from $135 billion in
1984 to around $571 billion in 2004, according to David
Hayes-Bautista, UCLA Professor of Medicine at the David Geffen
School of Medicine.
The rising purchasing power of Latinos has businesses across the
nation taking note. David Kostin, chief sector strategist for
Goldman Sachs, identified three factors that have companies trying
to tap into the Latino market: high population growth, high income
growth, and changing spending patterns. The U.S. Census Bureau
predicts that the Hispanic population, fueled by high fertility
rates and immigration, will comprise 20 percent of the U.S.
population by 2030, a rate of growth three times faster than the
national average.
Although Latinos have some of the lowest average income levels
of any ethnic group in the U.S., a Goldman Sachs report predicts
Latino income levels will rise to the national average as the
Hispanic population grows.
Consistent with purchasing patterns of lower-income groups,
Latinos spend about 93 percent of their pre-tax income, compared
with the US average of 82 percent. But this their spending patterns
are expected to change.
As Latinos accumulate more wealth, Kostin expects them to spend
more money on insurance, health care, and home ownership.
Due to what is called the “generation effect,” the
increase in Latino wealth is partly due to the growth in
second-generation immigrants with higher incomes than new
immigrants, said Kostin.
Companies that recognize the growing power of Latino consumers
and devote more of their resources to Hispanics stand to gain a
distinct advantage over their competition, according to the Goldman
Sachs report.
Monica Lozano, publisher of the Spanish language Los Angeles
newspaper La Opinion, said that businesses must increase their
spending when targeting the Latino population if they wish to
augment their number of Hispanic consumers. The growing Latino
demographic can no longer be viewed by businesses as a
“niche” market, she said.
Lozano emphasized that the future of US companies is largely
tied to the Hispanic immigrant population. Capturing the Latino
market must be made a “core” strategy of companies
looking to experience growth in the Hispanic demographic. U.S.
banks are also paying attention to the increasing economic
influence of Latinos.
Wells Fargo was the first bank in the U.S. to accept the Mexican
government-issued “matricula consular” cards by
customers wishing to open an account, said Vincent Liuzzi, Wells
Fargo regional president.
The impact of this was almost immediate. Since the bank began
accepting the “matricula consulars,” customers have
opened several hundred thousand Wells Fargo bank accounts with the
cards in the Los Angeles area, Liuzzi said. The Latino population
growth is of great importance to UCLA, said Chancellor Albert
Carnesale.
Carnesale said UCLA needs to increase the number of students
from underrepresented groups to ensure that people from all
segments of society are given the tools necessary to succeed in
life.
UCLA recently established a department in Chicana/o Studies to
address important Latino issues, but Carnesale said more needs to
be done.