While many of you will be loosening belts after the Thanksgiving feast, many more will be tightening them as the holiday shopping season begins.
According to The Conference Board’s Consumer Confidence Index, consumer confidence dropped for the fourth straight month in November. Hispanics, Latinos are the best chance for a merry holiday shopping season, but perhaps not in Connecticut.
Hispanic consumer confidence and revenue for their small businesses is outpacing that of the general population, according to two national reports.
These trends, if sustainable and valid, provide another indicator that the nation’s growing Hispanic population is well on its way to fulfilling its potential as a major driving force in the U.S. economy. Studies find Hispanic purchasing power between 1.5-1.7 trillion dollars.
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However, there is some question as to whether Connecticut with its above-average Hispanic employment rate is fully sharing in this high level of economic enthusiasm.
The Hispanic Consumer Sentiment Index, taken from July through September, stands at 105.9, up 10.9 points from the second quarter of 2019, according to the Florida Atlantic University Business and Economics Polling Initiative.
Moreover, the FAU index is 12 points higher than the third-quarter score of 93.8 for the overall U.S. population as published by the University of Michigan.
More than three-quarters of the 650 Hispanics that FAU surveyed by phone and online are from the South and the West where most Hispanics live. But while only 14.6 percent of the respondents were from the Northeast their index was even a higher 110.6. In addition, the index for Mexican-Americans was at the low end, 95.5 while Puerto Ricans had the highest result, 121.3.
Meanwhile, the average revenue of Latino-owned small businesses, including restaurants, retail stores, construction companies, increased by 46.5 percent in the past year, surpassing earnings growth in non-Latino businesses by as much as 12 percent, according to an annual study published recently by online lender Biz2Credit.
In Connecticut, those business specialists and researchers who would comment did not totally dismiss that Hispanic consumer confidence may be growing but were skeptical whether it was as strong as FAU’s index suggested.
“I have not seen this growth in the Latino confidence,” said a consultant who works with small business owners and asked not to be identified and also pointed to Hispanic-owned business among those recently shutting down in western Connecticut.
A Hispanic researcher, also speaking off the record, said he was “somewhat skeptical” that Connecticut shared in the high consumer sentiment findings, suggesting this index may be influenced by responses from California and Florida.
Attempts to obtain comments about Hispanic consumer sentiment from some business groups, including those with a Hispanic focus, were unsuccessful, although one statewide economic tracker did have figures showing increased optimism for the general population.
Support for the suggestion that there is a disparity between consumer confidence in Connecticut and the nation may lie in a key economic statistic.
“One possible explanation for the optimism (nationally) of Hispanics regarding their finances and the outlook of the economy,” stated Monica Escaleras, director of FAU polling institute, “could be the drop in the unemployment rate of Hispanics from 4.5 percent in July to 3.9 percent in September.”
In Connecticut, the unemployment rate for Hispanics is 5.8 percent, according to the state Department of Labor. This is a huge improvement from 2011 when during the recession this rate reached 17.8 percent, as well as a decrease from last when the jobless percentage was 6.9 percent. However, the Hispanic jobless rate is still about 40 percent higher than that for the overall population.
The huge uptick in consumer sentiment from July to September could be an outlier, a finding that sits an abnormal distance from other values in a random sample, said a University of Connecticut economics professor.
Jorge M. Agüero of UConn Institute for Latino/a, Caribbean and Latin Latin American studies (El Instituto), cited several FAU poll results that were confusing. “So, overall it seems hard to establish what is the increase capturing,” the associate professor of economics said.
The other key findings Agüero cited from FAU’s webpage include:
- Cost of living: 82.3 percent of Hispanics said the cost of living has gone up compared to 65 percent in the previous quarter.
- Buying a Car: 59 percent of Hispanics think it is a good time to buy a car compared to 67 percent in the previous quarter.
- Buying a House: 43 percent of Hispanics think it is a good time to buy a house compared to 69 percent in the previous quarter.
- President Trump’s disapproval rating is 45 percent compared to 66 percent in the previous quarter.
Before the recent 12-point surge, the FAU index has fluctuated between 86.4 and 98.6 over the past two issues with some of larger swings attributed to factors such as the projected impact of the Trump tariffs.
There is some similarity between the FAU findings and the optimism among Connecticut residents, Hispanics and non-Hispanics, that emerged in the InformCT Consumer Confidence Survey Research and Policy Institute online survey 505 residents conducted in July.
In FAU’s research, 70 percent of Hispanics said they are financially better off today than a year ago, up two points from the second quarter. Also, 74 percent of Hispanics indicated they would be better off over the next year, which is a four-point increase from the second quarter.
InformCT found that in Connecticut 35 percent of their respondents said they feel better off today than six months ago as compared to 23 percent who feel they’re worse off. In addition, 43 percent said they expected to be better off in six months, compared to 16 percent who expect they’ll be worse off financially. That comparison was 37-18 in the first quarter.
A notable disparity within the FAU findings is that Hispanic women are more optimistic about their financial future than men (80-68 percent).
One Latina who is upbeat is Mario Lino, a Bolivian-born principal in The Latino Way, a growing Hartford-based marketing and communications firm that works with businesses seeking to tap into the Latino market.
Lino said she agreed that Hispanic consumer sentiment is way up heading into the holiday season.
“I think Spanish consumers are preparing better and planning in advance. They are smart shoppers, looking for discounts, offers, coupons and are great online researchers,” she said.