Where do Black Consumers Spend Their Money During the Holidays

The holiday season is here. It’s time for gifts, holiday meals, and celebrations, parties, and community. The holidays are a great time to celebrate and give thanks for all we have. In this fun and joyous time of the year, we want to look at a part of the economy that affects us all.  We want to look at Black consumer spending during the holidays.

Black people in the US are richer and have more spending power than ever before. Recent surveys show Black wealth jumped 60% because of real estate ownership. All this spending gives Black people real economic power.  And with that power also comes the responsibility.  The responsibility to spend wisely.  

Black Consumer Power

Blacks have enormous spending power. In 2019, the Selig Center estimated total Black buying power in 2024 at $1.8 Trillion dollars or about 9% of all buying power in the United States. Consumer in the United States will spend $20 Trillion Dollars.  Recent surveys, such as the Survey of Consumer Finance, have found that African Americans’ wealth has jumped 60% percent between 2019 and 2022 to $45,000.  The gains were due to real estate ownership and business ownership.

Black businesses are growing in every sector.  If you cannot find a Black business that sells what you want you are not looking hard enough. In 2021, there were 161, 000 Black businesses with sales revenue of $183 billion dollars. Black Business employed 161,000 people and paid $53 Billion dollars in payroll wages.

Where do Black people spend their money?

About 80% of Black spending is survival (economists call it non-discretionary) spending. The are “needs.”  Examples are rent, food, transportation to work, and health care expenses.  If you don’t pay these bills, something bad will happen.  The other 20% is discretionary. These are “wants.” These are the things that make us happy.  The competition for that last 20% of spending is fierce.  For example, Apple spends an estimated $3 billion on marketing and advertising per year.

Research shows the top Black spending categories are: Electronics, Haircare, Skincare, Clothing and Apparel, Beauty and makeup, and Fragrance and Candles.  If you are thinking of buying a gift in one of these categories, then consider a Black business.

Blacks spend less than Whites, overall, because Black income and wealth are lower. But there are other factors as well.  Blacks have less access to credit. A second problem is desertification or lack of retail shopping opportunities. Finally, consumer discrimination is still real.  

Note #1: The focus on Black consumption of luxury goods is racist jealousy. People have no idea how hard someone worked or what they went through to buy that pocketbook. Black people buy far less luxury goods than Whites, so the real message is “You don’t deserve it.”

Note #2: Black consumers don’t feel powerful. The Black Civil Rights movement and Black politicians have discussed Black spending power for years. Why doesn’t all this money translate into economic and political power? Why hasn’t Black wealth and income translated into more stability, better living conditions, and greater happiness for Black Americans?

Consumer culture and status

So, it’s true, buying stuff can bring status.  And it can make you feel good.  Giving a gift or buying a bag can make you feel good. Thanks to endorphins in the human brain, making a purchase is satisfying on many levels. It tells the world: “I can provide, I can handle my businesses; I can provide for the people I care about.” Advertisers and marketers know all of this. In fact, business people have known this since the first camel, yam, cassava or breadfruit was sold 100,000 years ago.

What is fascinating from an economic perspective is that consumers act like they don’t know all of this or choose to ignore it. Just as Rural White voters continue to vote against their own economic interests (ACA), consumers continue to ignore their economic power. President Woodrow Wilson, a known racist, said “The business of America is business,” and that spirit continues to this day.

A great example from real life is when someone says, “I love your bag, where did you get it?“ They noticed your bag and you have status. You are on cloud nine for days. The bad news is that the status effects of purchases last only three to six months. It wears off.  Your friends get used to the bag, jersey, or the new car. The gift gets put away or worse re-gifted. The status “feeling” is addictive. You want that feeling again, so you run to the store.  Humans are both cooperative and competitive, but companies advertise to our competitive, selfish nature. It generates higher profits. The message in advertising is that you can buy happiness. But it is a false and addictive promise.

What does overall Holiday Spending look like?

Holiday spending is big. Nearly 30% of all spending occurs during the holiday period.  130 million people are expected to shop on Black Friday. Eighty (80%) percent of consumers will spend the same amount of money or more this season. The National Retail Federation estimates total holiday spending at $960 Billion dollar up 3% from last year. (NRF). NRF also estimates consumers will spend about $875 on core holiday items. PWC estimates consumers will spend an average of $1,530 over the holidays including about $786 for gifts, $510 for travel, and $234 for entertainment.

According to PWC, female shoppers are more price-conscious than male consumers.  After price, they prioritize, free returns, convenience, and speed. Forbes reports the top spending categories are: Food and festive meals (51%), Gifts (47%), Alcohol and beverages (41%), Travel (29%), and Entertainment (17%)

About 85% of Americans buy gifts for their friends and families. Gift cards are the most popular present to receive. 65% percent of Americans shop on line for holiday purchases. Online shopping increased about 8% this year.

There has been a growth in consumer credit at the retail level. Close to 20% of consumers are expected to use “Buy-Now Pay-Later” services to pay for holiday spending (Dallas Morning News)

We have a separate link to Black Spending Ideas and Rules

Summary

We are not asking you to change your spending, just consider a Black Business.  There are hundreds of Black Business directories at your fingertips, so you can no longer claim you cannot find a Black business. There is no longer any excuse not to spend money with a Black Business in 2023. Black people in the US are doing well, not great, financially.  We are asking Black consumers to use some of that spending power wisely and support Black businesses. Happy Holidays.

Sources

Income and spending patterns among Black households (US Census)

The Multicultural Economy (Selig Center for Economic Growth, 2019)

National Retail Federation (NRF)

Annual business survey  — Characteristics of Business (ABS)

Source: PWC Holiday outlook 2023(PWC)

Source: 2023 Holiday Spending Trends (Forbes Advisor). Survey size was 3000 people.

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