Latino market bolsters economic outlook
by ajay singh
today staff writer
The Latino market is catching the attention of big business.
California’s real estate market is still red hot, but there are signs it’s starting to lose steam — and that could lead the construction-driven state economy into a period of sluggish growth over the next two years, economists at the UCLA Anderson Forecast said Sept. 27 in their third-quarter report of the year.
“The California economy, like the U.S., seems healthy on the surface, but scratch away and what you see is not encouraging,” said Christopher Thornberg, senior economist at the Anderson Forecast and author of its California forecast.
It isn’t just that “the housing party is ending” (even though construction has not yet declined). Other core sectors that could be expected to pick up some of the economic slack aren’t showing signs of solid job growth, despite stable profits.
Information, manufacturing and services — vital to the state’s long-term economic health — continue to languish, and overall job growth is far from impressive. “The forecast for California is mediocre at best,” Thornberg said. The only good news is that the slowdown is not expected to start in late 2005, as the forecast had predicted in June. “At worst, we are liable to dip into another recession.”
In contrast, much of the news was upbeat when the economists turned their attention to the topic of their Sept. 27 conference, “The Hispanic Impact on the California Economy.” Latinos are earning, spending and investing faster than the average American, and the enormous economic implications of this are driving business decisions at many U.S. companies.
“Why is the Latino population worth focusing on?” asked David Kostin, chief sector strategist for Goldman Sachs. “There wasn’t much focus on this question in the past. Now that the economy is slowing down, where do you pick up the market share?”
Housing and banking for Latinos are two possible areas. The rate of Latino home ownership is just 47%, compared with 67% for the rest of the nation. And only 51% of Latinos have bank accounts, compared with a national average of 77%, Kostin said. Some companies are focusing intensively on health insurance for Latinos, he added.
California, New York, Texas and Florida, four states where 67% of Latinos live, especially stand to benefit from the focus on the Latino market, Kostin noted.
Latinos spend $300 billion a year in Los Angeles, driving its revitalization, said Monica Lozano, publisher of the Spanish-language daily La Opinión and a UC regent. And although they own small but robust businesses, they need help to grow. “It’s not often lack of capital — it’s not knowing what to do,” she said. “That’s where trade organizations and banks come in.”
And yet, because of cultural differences, Latinos consume different goods and services, making the very idea of a unified Latino market something of a fallacy, said Bob Jimenez, a media consultant who moderated a panel on the importance of the Latino market. The key challenge for investors, he said, is “how to navigate the market without overlooking regional and demographic differences.”
Los Angeles Mayor Antonio Villaraigosa, who was welcomed as an honorary Anderson graduate and given a school hat, had the last word at the gathering. “The Latino agenda is the American agenda,” he said. “Our diversity is the key to our destiny as a region.”
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