When it comes to Hispanics' attitudes and behaviors, there are a few well-known truths: their strong sense of family and community, their high work ethics, their spontaneous take on life, and their undeniable sense of optimism.
However, given the plethora of negative news against the Latinos, stemming from a poisonous political and social environment, there has been some reason to believe that this well-known optimistic spirit is being undermined by these external factors which could be concerning for corporate America, given potential negative consequences from a consumption standpoint.
Recently Simmons published its "Winter 2018 NHS" study, with field data collection ranging from July 2017 to early March 2018, and a specific set of data caught my attention. I enjoy using Simmons data to gauge future consumption intentions, specifically, the ones that either require a significant financial commitment or those who demonstrate a strong sense of optimism regarding one's financial situation.
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People who are optimistic about the economy and the job market aim to upgrade their jobs, changing for better. In fact, 11% of Hispanics (estimated at 4.4 million employees) plan to switch jobs in the next 12 months. This is the best yearly result for Hispanics since pre-recession 2008. However, this optimism is not fully shared with non-Hispanics, with only 8% of non-Hispanic respondents saying that they planned to actively seek a better job in the next year, the lowest response level in the past seven years.
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Digging a bit more into the data series you will find two important consumptions projections: buying a house and buying a car. These decisions are not made lightly and again when compared to non-Hispanic consumers, Hispanics demonstrate a disproportional level of confidence related to these important financial decisions.
According to the data, 9% of Hispanics (or approximately 3.5 million consumers) are planning to buy a house in the next 12 months. This is compared to 6% of non-Hispanics. Telling the same story from a different angle, Hispanics may represent 22% of all new home buyers in the next 12 months, despite the fact they represent only 18% of the population.
When it comes to auto purchases (buy or lease), 14% of Hispanics and 11% of non-Hispanics are planning to get a new car in the next year. This level is similar to 2017 levels for Hispanics, but when it comes to non-Hispanics, these levels represent a decrease from 13% just one year ago.
So, at this point, it should be pretty clear that Hispanics are feeling extra optimistic about the future and their own financial situation. They are planning to change jobs, make more money, and spend significant levels of disposable income.
Naysayers may point out, however, that Hispanics tend to invest less and save less which may explain the above-described behavior. In other words, maybe Hispanics will save less when compared to non-Hispanics and thus intend to spend more.
To them, I'd say that while Hispanics (and minorities as a whole) have a history of investing less for the future, due to a combination of factors including less available income for investing and lower levels of financial literacy, the data also provides a glimpse of how things may be changing for Hispanics when it comes to financial investment trends.
For example, more than 3% of the respondents (or an estimated 1.3 million Hispanics) plan to make their first financial investment ever over the next twelve months. This is the highest level since 2008. For non-Hispanics, the level was half of that, with 1.5% of respondents or approximately 3.1 million new investors. In other words, Hispanics may represent almost a third of all new investors in the market in the next 12 months.
The high level of financial optimism will fuel another wave of positive sales coming from the Hispanic segment. This may be driven by the benefits of decreasing unemployment levels and salary increases. Moreover, this extra consumption may be coming accompanied by a healthy decision to save some of their extra income, thus building the foundation of a more secure future, which tends to create a positive effect in the generations to come.
So once again, CEOs and CMOs across the country will have a choice to be made, either accept the limited growth rates of saturated markets or embrace the Hispanic segment as the antidote for anemic sales.