The U.S. Latinos could have 5th largest economy in the world

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The U.S. Latinos could have 5th largest economy in the world

The U.S. Latino population is a lucrative demographic group.

The U.S. Latino cohort would have the fifth-largest economy in the world if it were its own country, according to the 2022 LDC U.S. Latino GDP Report from the Latino Donor Collaborative.

In less than a decade, the U.S. Latino GDP has grown by $1 trillion and reached $2.8 trillion in 2020, according to Josean Fernandez, director of national accounts at Ariel Investments. The growth rate for Latino communities has increased by 4.1% per year, compared to 2.1% for non-Latinos, while the average income for the community has surpassed that of the U.S. economy.

The Hispanic Latino population has been a driving force in many industries.

In the year 2019, Latino-owned businesses generated 2.9 million jobs. According to LDC, the finance, insurance, and real estate industry made up the largest share of Latino economic activity by the year 2020, generating $459.7 billion.

At the end of the day, we know very keenly that investing in diverse managers, investing in diverse perspectives can lead to outperformance, Fernandez said. Institutions have a role to play here. There is a financial argument to be made. A study by the Boston Consulting Group found that companies with a diverse workforce are likely to generate 19% more revenue than before.

They can invest in emerging managers, whether it be on the public side or on the private side, Fernandez said. Venture capital firms are beginning to grow within the emerging managers section, as well as private equity and private credit. There is a tremendous amount of opportunity. The LDC report found that 2020 was an exceptional year for the U.S. Latino population.

The report stated that the real wage and salary income of Latinos increased by 6.7% despite the extraordinary challenges presented by the pandemic. Non-Latino income shrank by 1.1%. During the same year, the U.S. Latinos had a higher labor force participation rate than their non-Latino counterparts.

The LDC report said that Latinos were a critical source of resilience, not just for their own families and communities, but for the U.S. economy as a whole.

The U.S. economy contracted during that time. The real U.S. Latino GDP contracted by just 0.8% compared to a 4.4% contraction for non-Latino GDP. In that time, only China experienced stronger growth than the U.S. Latinos.

In the report, Sol Trujillo, founder of LDC, wrote that the increase in the growth and strength of Latino human capital has resulted in a powerful economic engine for our country.