A new report by economic think tank Latino Donor Collaborative and Wells Fargo revealed that Latinos contributed $3.6 trillion to the U.S. economy in 2020, a 13% increase compared to the previous year. This growth would rank U.S. Latinos as the fifth largest economy in the word, surpassing the annual economic output of countries such as India, the United Kingdom, France, and Canada.
The report highlights that the U.S. Latino economy is one of the fastest-growing in the world, with an average annual growth rate of 4.6% between 2017 and 2022, more than double the 1.8% growth seen in the broader U.S. economy.
"There is no doubt that the U.S. Latino economy is a formidable force, characterized by strong GDP growth, significant population expansion, high workforce participation, and increased educational achievements," Sol Trujillo, Latino Donor Collaborative chairman, said in the report. "This is not a matter of diversity and inclusion; it is a critical business strategy," Trujillo added.
The data, which draws from several sources including the U.S. Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics, indicates that key industries for the Latino workforce include manufacturing, public administration, accommodation and food services, construction, and transportation. Manufacturing alone contributed $457.4 billion to the Latino economy, marking a significant 48.4% year-over-year growth.
When it comes to geographic distribution, California led the nation in Latino GDP in 2022, contributing $935.2 billion, followed by Texas, Florida, New York, and Illinois.
In addition to economic growth, the report points to a substantial increase in wealth among Latino households. Over the past decade, the wealth in households from this demographic has tripled, reaching a median net worth of $63,400 in 2022, adjusted for inflation.
This growth has been driven by increasing homeownership rates, rising home prices, and a surge in Hispanic-owned businesses. Nevertheless, a significant wealth gap remains compared to non-Latino white households, which had a median net worth of $283,300 in 2022.
Looking ahead, the Latino Donor Collaborative forecasts that the U.S. Latino economy will continue to grow rapidly, with projections suggesting it will surpass Japan's economic output by 2024 and Germany's by 2027.
This growth is supported by the U.S. Latino population's rapid expansion, which has outpaced non-Latino population growth, particularly in states like Colorado, Washington, and Georgia. The increase is also supported by the fact that Latino population is significantly younger and continues to enter the labor market in large numbers.
"Leveraging the unique and powerful opportunities presented by the U.S. Latino market will benefit every American," Trujillo said.
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