2018 Multicultural Economy Outlook

2017 © Santiago Solutions Group Inc.
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2018
Multicultural
Economy Outlook

2018MulticulturalEconomyOutlook
Exec Summary
U.S. Marketers are quickly shifting growth priorities among multicultural (MC) segments,
especially since the White Non-Hispanic (WNH) segment has been declining since 2016. The MC
economic outlook for 2018 looks remarkably powerful for several reasons:
• The Employment-Participation rate is higher than WNH and continues to step up, especially
for Hispanics
• Unemployment rate is at record lows for all MC segments
• Personal Income has continued to increase for all MC segments while it has slowed down for
WNH.
As a result, 100% of all new Upscale and 36% of new Affluent Households in the U.S. have come
from MC segments, boosting the MC & LGBT’s economy at twice the rate of WNH to $4.6
Trillion in 2018 -equivalent to third place in the global economy, and next to China in buying
power!
Despite the MC consumer spend strength and the segments' strong job participation, MC
consumers’ confidence in their immediate personal finances has been softening, while WNH has
been increasing. Most notably, MC consumers have been losing faith in their future economic
wellbeing and the overall direction of the U.S. Economy; this is especially true among African
Americans. In fact, even though the stock market is reaching record highs, MC consumers appear
leery about entering financial markets. That said, they appear 40-50% more resolved than WNH
in making investments to improve their homes, purchase new homes and even making durable
goods purchases like autos and major electronics.
The bottom line is that, economic indicators suggest that Multicultural consumers are reaching a
new normal in which they are uncertain about how policies may impact them in the long-run, yet
their personal pocketbooks are healthy thus they plan to spend at leisure throughout 2018.
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The U.S. Is At a Major Important Inflection Point Marked as the WNH
Segment Began Declining a Full Decade Prior to Census Projections;
Currently 100% of US Population Growth Generated from MC Segments
3
Source of Growth 2014-15 vs 2015-16
(000’s)
2,561.8
1,708.7
-853K
-33%
100%
of U.S.
Growth
is MC
• WNH declined from a modest growth of 125K in 2015 to a small decline of 55K in 2016, the first decline
ever observed, but most notably, coming about one full decade earlier than Census projections
• Half (51%) of the US growth in 2016 came from Hispanics, up from 47% in 2015 and the Other/Mixed
Race segment generated 25% of the entire U.S. population growth
Source: SSG Analyses of American Community Survey (ACS 1-year estimate; 2014-2016), projection based on 2010-2016 growth rate
SEGMENT 2018E
Total Population 328.4 100%
White NH 197.7 60%
Multicultural 130.7 40%
Hispanic 59.9 18%
African American 40.4 12%
Asian/NHPI 19.0 6%
Other/Mixed Race 11.3 4%
2014-15 2015-16
13%
22%
13%
47%
5%
25%
17%
17%
51%

Multicultural (MC) Employment-Population Ratio Continues To Rise
Faster Than Total U.S. Population
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• Multicultural employment-population ratio
has grown much faster than Total U.S since
bouncing from the recession in 2011
• A higher share of Hispanics and Asians are
employed than White NH
• Hispanic employment-population ratio is
the highest of all segments, reaching 63% in
2017, 3 points higher than Total U.S.
• Changes since 2011:
• Total U.S.: 3.0%
• African Am.: 11.4%
• Hispanic: 6.5%
• Asian: 2.6%
* Includes some Hispanics
Source: SSG analysis of Current Population Survey Monthly Employment-Population Ratio data 1975-2017
Employment-population ratio: Portion of the population that is employed. It measures
the job holders and tracks the creation of jobs versus the adult population

MC Unemployment At Lowest Level Since Recession and
Projected To Drop Further in 2018
5
* 10-Month Average of Unemployed Population Jan-Oct
Source: SSG analysis of Current Population Survey Monthly Unemployment Data
2016-17 and Quarterly Full-Time Employment Data 2010-2017
• As of October 2017, MC unemployment rate
was at the lowest level since the Great
Recession for Hispanic, African American, and
Asian segments
• The Hispanic unemployed population is
projected to drop below 1.3 Million by 2018, a
16% decrease since 2016
• The AA unemployed population is projected
to decrease by 278,000 from 2016 to 2018, a
17% decrease

Income Growth Has Been Increasing for All Multicultural
Segments While Slowing for White NH
2015-16 Aggregate Income growth accelerated for all MC segments vs. previous periods, while the
Aggregate Income growth for White Non-Hispanics has been slower and showed some deceleration
• 13% among Hispanics
• 11% for Asian/Other
• 9% for African Americans
•
Source: SSG Analyses of American Consumer Survey (ACS 1-year estimate, 2013-2016)
6
-13%
decrease
Aggregate Income:
Total Income of
segment before
accounting for tax &
Inflation

100% of All New Upscale Households and 36% of New
Affluent Households Have Been From MC Segments
•There will be 637K new Upscale households (HHs) by 2018 -
all of them Multicultural
•Multicultural upscale HHs are growing at a faster pace,
while White NH have begun to decline
•There will be 3.4M new Affluent households by 2018, 35%
of them will be Multicultural
•Affluent HHs: Compared to White NH households, Hispanics
are growing 2x, African American 1.4x, and Asian/other 1.7x
faster
Source: SSG Analyses of American Consumer Survey (ACS 1-year estimate; 2010,2014-2016)
HH Income $50-100K HH Income $100K or more
7
Segment Upscale Affluent
White NH -0.3% 4.6%
Hispanic 3.9% 8.7%
African Am. 2.2% 6.5%
Asian/Other 2.1% 7.6%
Household Growth Rate
(2010-2016)
White NH Hispanic African Am. Asian/other
Upscale Households:
$50K-100K
Affluent Households:
$100K or more

Diverse Segments Buying Power Will Continue to Expand
Faster Than White NH, Reaching $4.7 Trillion in 2018
8
Source: SSG analysis of Selig Center buying power statistics 2010 & 2016,
Bloomberg.com – Witeck Communications study
Buying Power: Total disposable after-tax income
available to spend on any goods and/or services
2.9%
5.4%
6.5%
3.6%
White Non-Hispanic Growth hRate
• MC buying power is growing notably
faster than White NH’s 2.9% CAGR
o Hispanic & Asian NH buying
power are the fastest growing,
almost 2x faster than White NH
for Hispanics, and 2.2x faster
for Asian NH’s
• 2018 projected MC buying power
stands at $3.7 Trillion plus $1 Trillion
for LGBT
• Hispanic Buying Power is projected
to surpass $1.5 Trillion in 2018,
African American will reach $1.2
Trillion and Asian will almost reach
$1 Trillion
Annual Growth Rate
2010-2016
3.7%
**2015

Despite Their Significant Economic Progress, MC Consumer
Confidence In the Present Has Declined Since Last Spring
9
• Multicultural segments’ personal
finances Consumer Confidence
Now has been decreasing since
Spring of 2016
• From Spring 16’ to Spring 17’
Confidence decreased:
• 4.3% for overall M/C
• 5.0% for Asian/Other
• 4.4% for African Am.
• 3.3% for Hispanics
Source: SSG analysis of GfK MRI Spring & Fall data 2013-2017, University of Chicago GenForward Survey, FAU Hispanic Consumer Sentiment Index, & University of Michigan Index of Consumer Sentiment
Consumer Confidence Index NOW: The degree of optimism consumers feel
about their personal finances & the country’s economy NOW vs. the last 12
months; indexing the difference between Better and Worse outlook

Most Notably, MC Consumers Have Been Losing Faith in the
Future Direction of the Country, In Sharp Contrast to WNH’s
Rising Confidence
10
• MC Consumer Confidence in their
own, as well as the country’s,
future has declined sharply since
Fall 2015
• From Spring ‘16 to Spring ‘17
Future Confidence decreased:
• 5.9% for overall M/C
• 8.5% for AA
• 6.5% for Asian/Other
• 2.6% for Hispanic
Consumer Confidence Index FUTURE: The degree of optimism consumers feel about their personal finances & the country’s economy in the next 12 months
(FUTURE); indexing the difference between Better and Worse outlook
Source: SSG analysis of GfK MRI Spring & Fall data 2013-2017, University of Chicago GenForward Survey, FAU Hispanic Consumer Sentiment Index, & University of Michigan Index of Consumer Sentiment

Perhaps MC’s Growing Concern About the Future, May Be
Affecting Their Plans to Invest in 2018 Financial Markets
Source: SSG analysis of GfK MRI data 2012-2017. Intent = Incidence of “Very Likely To Invest”.
2016 2017
• Overall Multicultural segments have
been less likely to plan financial
investments than White NH’s.
o This gap increased further
from 2016-2017 among
Hispanics and African
Americans
• Asian/Other Segment shrunk the
gap against White NH from 2016-
2017
Index = MC Segment
White NH
11
Measures the top box intent to invest in stocks,
bonds, or mutual funds in the following next 12
months indexed against White NH

Nevertheless, MC Segments Feel Strongly About Investing In
Their Homes, Showing 50% More Interest Than WNH In
Home Improvements and Home Purchases
Source: SSG analysis of GfK MRI data 2012-2017.
2016 2017
• All Multicultural segments widened their
intent to remodel or purchase new homes
from 2016-2017 vs. WNH
• African Americans have a higher intent for
Home Improvement or Purchase for 2016
& 2017
• The likelihood for segments to invest in a
home in 2017, compared to White NH’s:
o African Americans are 80% more likely
o Hispanics are 35% more likely to plan a
remodel or home purchase
o Asians/Other are 29% more likely
12
Measures the top box intent to make a home
improvement/purchase in the next 12 mo.
indexed against White NH

• Intent to purchase durable goods among Multicultural
segments is 38% higher than White NH
• Multicultural segments, especially African Americans
and Asians/Other are more likely to plan to buy
durable goods in next 12 months
• In 2017 compared to White NH:
• African Americans are 57% more likely to purchase
durable goods such as appliances, TVs, computers
or smartphones in the next 12 months
• Asians/Other are 45% more likely
• Hispanics are 21% more likely
MC Segments Will Continue to Drive Demand for Durable
Goods, Showing Almost 40% More Interest Than WNH in
Major Purchases in 2018
Source: SSG analysis of GfK MRI data 2012-2017. Intent = Incidence
of “Very Likely To Purchase”.
2016 2017Index = MC Segment
White NH
13
Measures the top box intent to buy a vehicle, e-reader, tablet, home theater system,
flat screen TV, video camera, blue-ray player, desktop/laptop computer, satellite radio,
smartphone among others in the next 12 mo. indexed against White NH

Concerns About Trump’s Effect on MC Consumers
Have Decreased
14
Multicultural and LGBT consumers have been much more concerned than the average American
about the divisive social and racial discourse in current politics.
These hyper concerns contributed to a slowdown on MC growth, which was recorded by Nielsen
and NPD- especially among Hispanic sales across some categories in Q1 and Q2 of 2017. More
recently, in Q3 and Q4 2017, reports have indicated that MC growth resumed its typical rapid pace
driving the overall growth of many categories.
Although MC consumer confidence in future finances dropped, Hispanic confidence in the present
has bounced back in some recent polls and it still leads WNH.
MC consumers seem to have reached a new normal and MC spending in 2018 should be stronger,
despite continued divisive rhetoric from the White House.
Source: SSG analysis of FAU Hispanic Consumer Sentiment Index, University of Chicago GenForward Survey & University of Michigan Index of Consumer Sentiment

Powerful Seamless Solutions
15
Dávila Multicultural Insights - DMI -
counsels clients to capitalize on the
growing multicultural marketplace by
providing cross cultural marketing
strategies and positioning, market entry
guidance, business development and
brand positioning opportunities, while
helping to embed a diverse perspective
into all facets of their business/branding
processes.
Strategies and recommendations are
based on strong analytics that target MC
groups – with a deep subject matter
expertise in the Hispanic market, These
take into consideration acculturation
levels, age, language preference, country
of origin, among others.
DMI also helps clients put these strategies
into practice by serving as an extension of
clients’ teams. This work includes: media
and digital executions, leveraging
celebrity/digital influencers and
ambassadors, solidifying partnerships,
tactical executions, among others.
For 17 years, Santiago Solutions Group -
SSG- has guided strategic growth
roadmaps by uncovering ways to
reposition consumer motivations to
engage with, consider, and purchase
brands.
We rely on a set of proven analytical and
market research tools to precisely define
the size of the opportunity, needs and
reasons-to-believe through various tools
such as representative quantitative online
surveys, shopper studies, ethnos, IDIs, and
virtual focus groups.
These insights forge the solid foundation
for successful marketing and messaging
strategies aligned across Hispanic,
Multicultural, Gen Z, Millennial and Non-
Hispanic White segments.
SSG provides senior expertise in guiding
clients’ segmented marketing strategies
by leveraging analytics, econometrics,
planning, change management and go-
to-market solutions.
100% minority owned

Contact Information
16
Santiago Solutions Group
818.509.5901
@Carlos_SSG
@Santiago_Group
Carlos@SantiagoSolutionsGroup.com
Tatiana@SantiagoSolutionsGroup.com
SantiagoSolutionsGroup.com
Gilbert@davilami.com
Lisette@davilami.com
Davilami.com.com /Media-
Center/Newsletters
818.285.8729
Davila Multicultural Insights

2018 Multicultural Economy Outlook

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