Opportunities for Regional Advantage: The U.S. Latino GDP is the 5th Largest Economy in the World (Surpassing the U.K. and India)

If Latinos living in the United States were an independent country, the U.S. Latino GDP would be the fifth largest GDP in the world, larger than the GDPs of India, the United Kingdom, or France. As Globalization is transformed and regional power clusters emerge globally, Latino spending power, economic progress, workforce participation, and progress growth are a source of regional competitive advantage which will buoy the U.S. Total GDP for the foreseeable future. Details here.

Regionalization is the Future of U.S. Strategic Advantage

We recently explored the regional impact of the CHIPS and Science Act as representative of a transformation in globalization through a strategic commitment to manufacturing semiconductors in the U.S. – what some call are calling reshoring – along with the potential to act as a force function in U.S. regionalization (over continuing a dependence on global supply chain and manufacting capabilities, which is detrimental to national security) through the establishment of new advanced manufacturing clusters in the U.S., including semiconductor research and manufacturing ecosystems.

As early as December 2021, we provided an analysis of how “Global IT Supply Chain Disruptions Should Bolster Innovation and Cybersecurity with North American Allies“:  “Backlogs in the global intermodal supply may precipitate a return to North America of over 40 years of outsourced manufacturing.  So too, for reasons of national security and regional competitive advantage, global IT supply chain disruptions (ransomware, semiconductor shortages) necessitate business leaders and policymakers to take a fresh look at the Information Communications Technology (ICT) and Cybersecurity Strategy for North America.  Did NAFTA even have a robust ICT commitment? How do business leaders and policymakers do a post-mortem on NAFTA, from an ICT perspective, to assess lessons learned and formulate forward-thinking strategies and innovative ICT-based trade initiatives? What is the broad ICT regulatory environment like in North America?

More importantly, do the Central America Free Trade Agreement (CAFTA) or the United States-Mexico-Canada Agreement (USMCA) have a robust ICT strategy, with specific partner country agreements and commitments?  What are the ICT innovation and investment climates in Mexico and Canada?  Is ICT investment part of the solution for the creation of regional economic development initiatives in partnership with the Northern Triangle countries in Central America, to assuage the waves of refugees heading to the U.S. due to climate migration and asylum-seeking status based on gang violence?

Policymakers need to keep front of mind that refugees are just that:  refugees are in a forced migration pattern, as most people do now want to leave their country of origin if they had the choice. Mothers and fathers do not want to send a child alone on a dangerous journey North in the nefarious hands of “Coyotes” (human smugglers).  How does the U.S. create incentive systems to stay home and work opportunities based on ICT innovation in these countries?  Where are Panama and Costa Rica in this mix of concerns?”

The 2023 U.S. Latino GDP Report is an interesting fusion of this exploration of how North America should be strengthened through policy as a regional economic, cybersecurity, and national security stronghold (while also re-organized into competitive, advanced manafucturing clusters and ecosystems by way of the Chips and Science Act)  – and the role the U.S. Latino, native born citizenry will play as a GDP-based economic, workforce, and cultural driver of this strategic North American regionalization and transformation of globalization.  

The 2023 U.S. Latino GDP Report

From the Report:  Executive Summary

“If Latinos living in the United States were an independent country, the U.S. Latino GDP would be the fifth largest GDP in the world, larger than the GDPs of India, the United Kingdom, or France.”

“The 2023 U.S. Latino GDP Report provides a factual view of the large and rapidly growing economic contribution of Latinos living in the United States. In this 6th annual publication, we estimate the U.S. Latino GDP based on a detailed, bottom-up construction which leverages publicly available data from major U.S. agencies. The most recent year for which the core data are available is 2021. Thus, this year’s report provides a snapshot of the total economic contribution of U.S. Latinos in that year. As a summary statistic for the economic performance of U.S. Latinos, the 2021 U.S. Latino GDP is revealing. The total economic output (or GDP) of Latinos living in the United States in 2021 was $3.2 trillion, up from $2.8 trillion in 2020, $2.1 trillion in 2015, and $1.7 trillion in 2010.

“While impressive for its size, the U.S. Latino GDP is even more noteworthy for its rapid growth.”

Among the ten largest GDPs, the U.S. Latino GDP was the third fastest growing from 2010 to 2021, while the broader U.S. economy ranked fifth. Over that entire period, the compound annual growth of U.S. Latino GDP averaged 3.5 percent, compared to only 1.6 percent for Non-Latinos. In other words, for more than a decade, Latino GDP grew nearly 2.5 times faster than Non-Latino GDP. In 2021, Latino consumption stood at $2.14 trillion. At 68 percent of U.S. Latino GDP, the share is nearly identical to that of the broader U.S. GDP.

More striking is that Latinos in the United States represent a consumption market larger in size than the entire economy of nations like Italy, Canada, or Russia. From 2010 to 2021, Latino real consumption grew 3.0 times faster than Non-Latino, driven by rapid gains in Latino income. Over the same period, Latino real income grew nearly 2.5 times faster than the income of Non-Latinos  counterparts. Latinos’ labor force participation premium has climbed steadily since 2010, when the gap was 4.4 percentage points. Considered together, these patterns underscore the fact that Latinos are a major driver of economic growth in the United States.

For a second year in a row, data also highlight that U.S. Latinos are an important source of resilience for the broader economy. In 2021, despite a second year of COVID-19 pandemic conditions, Latinos in the U.S. propelled the overall economy forward with inflation-adjusted Latino GDP growth of 7.1 percent – a full 2 percentage points higher than the growth of Non-Latino GDP. Over the course of the first two years of the pandemic, the compound annual growth of real U.S. Latino GDP averaged 3.3 percent, very close to the average growth rate of 3.5 which prevailed during the decade before the pandemic.

2023 U.S. Latino Economy Reaches $3.2 Trillion: 2023 Official LDC U.S. Latino GDP Report Provides New Data and Insights on Spending Power, Economic Progress, and Population Growth

From BusinessWire:

U.S. Latino Economy at a Glance

• U.S. Latino GDP now valued at $3.2 trillion (14% YOY increase), growing 2.5x faster than non-Latino equivalent.
• U.S. Latino purchasing power is measured at $3.4 trillion.
• In 2021, Latino income in the U.S. amounted to $2.5 trillion and grew at a rate of 4.7% compared to 1.9% for non-Latinos.
• Measured by GDP, the U.S. Latino economy would rank as the world’s fifth largest.
• Its growth comes from its youth, its labor force participation, educational attainment, and income growth.

What Next? Future Data-Driven Analysis for Decisionmakers