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Survey: Black Spending Rebounds, Outpaces Whites On Big Ticket Items

August 19, 1996

CHICAGO (AP) _ Black buying power increased sharply last year, helping black households outpace white households on spending for cars, children’s clothing and perishable foods, a new study reports.

The shift highlights black consumers’ increasing importance to the U.S. economy, said Ken Smikle, editor of the study made by the research firm Target Market News Inc., which specializes in analyzing the black consumer market.

``Even though African Americans are only roughly 13 percent of the population, they’re starting to have a significant influence on many (business) categories,″ Smikle said Monday. ``When you’re talking about billions of dollars to be made or lost, businesses have to sit up and take notice.″

Personal income for blacks rose to $324 billion in 1995 from $304.5 billion a year earlier, the Chicago-based research firm estimated.

Previous studies have found the amount of money blacks have to spend is growing faster than that of other U.S. groups. And increasing confidence in the economy has led blacks to loosen their purse strings following a sharp drop in spending on big-ticket items a year earlier, Smikle said.

``In the past two years, blacks have had a lack of confidence in the economy and their own financial situations, leading them to delay spending,″ he said. ``Now that things seem to be more optimistic, they are making up with postponed purchases.″

Black households spent $10.8 billion last year on new cars and trucks, a 156 percent increase over $4.1 billion a year earlier, the study found. While white households spent more on cars and trucks, the increase was just 9 percent from a year ago.

The survey analyzed in-person interviews and diaries taken from 3,000 black households for the U.S. Department of Commerce’s annual consumer spending survey.

Among other findings, the average black household:

_Spends $1,592 a year on clothing, compared to $1,650 for whites. But blacks outspent whites nearly 10 percent more on clothing for children under 15, $292 vs. $265.

_Spends an average 48 percent more than whites on food prepared at home, including fresh meat, fish, eggs and poultry.

The numbers emphasize the differences in spending between blacks and other segments of the population and could give businesses more insight into how to expand markets believed saturated among the general population.

Following the general trend of the entire population, blacks posted large increases in purchases of appliances and consumer electronics. Smikle said the survey did not ask if blacks had bought new homes, although the numbers suggest a significant amount did.

Spending on travel and lodging fell 6 percent to $4.2 billion from $4.5 billion a year earlier, mostly on declining expenses for air and train travel. Expenditures for entertainment and leisure held steady at $1.8 billion, the survey found.

Some call the findings conservative. A University of Georgia study conducted last year estimated black disposable income, or the amount of money available after deducting taxes, at $406 billion in 1995 and $427 billion in 1996.

``The story is one of demographics,″ said Jeffrey Humphreys, the university’s director of economic forecasting. ``The black population is increasing faster than the overall population, meaning there are more black consumers.″

Black buying power is likely to increase even more over the next decade because the majority of black consumers today are young and have not reached their full earnings potential, Humphreys said.

Businesses are taking note. Sears, Roebuck & Co., for example, buys a line of clothing tailored specifically to blacks in heavily black areas. This fall, in Oakland, Calif., Sears is opening its first inner-city store in years. Other Fortune 500 companies hire black advertising and marketing firms to tailor their pitches to that segment.

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