Dimensions And Insights: The US$1.7 Trillion Economic Bloc That Many Miss

Regina Curry, Chief Diversity Officer, Franklin Templeton

Filling consumers’ needs can bridge communities with entrepreneurs and companies, but biases can cause missed opportunities. Chief Diversity Officer Regina Curry discusses the increasing financial strengths of Black and African American communities, a projected US $1.7 trillion economic bloc in 2030. Companies and entrepreneurs will find that serving Black and African American consumers, investors, and communities will cultivate markets that may seem invisible.

Let go of blind spots to reveal limitless ideas.

Entrepreneurs, the business world’s dream makers, see many opportunities and needs from a consumer’s lens then imagine and manifest solutions. Filling consumers’ needs can bridge communities with entrepreneurs and companies, but biases can cause missed opportunities. Companies that have not viewed Black and African American consumers and investors as a priority demographic for generations have missed and underserved essential needs, such as food, housing, healthcare, broadband, banking, and investing.¹ Yet, despite their financial invisibility to many, Black and African American communities and entrepreneurs continue to increase in financial strength:

• At US$910 billion in 2019 to a projected US$1.7 trillion in 2030, Black and African American-buying power continues to grow in the United States as a powerful economic bloc, matching the gross domestic product of Mexico, Canada, and Italy.²
• The Black and African American-buying power boost developed from a rise in cohort businesses ownership, population, and educational attainment with more college graduates, and the youth cohort yet to reach peak earning and buying-power years.³
• Not a monolithic economic bloc, Black and African American consumers have shifting and diversifying preferences.⁴ The 2020 US Census reported that while the Black or African American population alone grew 5.6% since 2010, the multiracial Black or African American “in combination” population grew 88.7%.⁵
• Black and African Americans hold more investments in cryptocurrency, real estate trusts, ETFs (exchange-traded funds), and college savings plans as compared to the US general public, according to respondents in our recent survey study.⁶
• Entrepreneurial activity increased from Black and African Americans as the overall US rate of entrepreneurship declined over the past 30 years. Black and African American women and millennials rose as the fastest growing groups of US business owners.⁷

Black and African American entrepreneurs start businesses more than any other US community.⁸ Funding these businesses and real-estate ventures remains one of the greatest wealth-building opportunities.⁹ Companies and entrepreneurs will find that serving Black and African American consumers, investors, and communities will cultivate markets that may seem invisible. We all benefit when we eliminate biases and build bridges that connect communities with economic opportunities for generations to come.

What are the risks?

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Investments in fast-growing industries like the technology sector (which historically has been volatile) could result in increased price fluctuation, especially over the short term, due to the rapid pace of product change and development and changes in government regulation of companies emphasizing scientific or technological advancement or regulatory approval for new drugs and medical instruments.

Buying and using blockchain-enabled digital currency carries risks, including the loss of principal. Speculative trading in bitcoins and other forms of cryptocurrencies, many of which have exhibited extreme price volatility, carries significant risk. Among other risks, interactions with companies claiming to offer cryptocurrency payment platforms or other cryptocurrency-related products and services may expose users to fraud. Blockchain technology is a new and relatively untested technology and may never be implemented to a scale that provides identifiable benefits. Investing in cryptocurrencies and ICOs is highly speculative and an investor can lose the entire amount of their investment. If a cryptocurrency is deemed a security, it may be deemed to violate federal securities laws. There may be a limited or no secondary market for cryptocurrencies. The opinions are intended solely to provide insight into how securities are analyzed. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio. This is not a complete analysis of every material fact regarding any industry, security or investment and should not be viewed as an investment recommendation. This is intended to provide insight into the portfolio selection and research process. Factual statements are taken from sources considered reliable but have not been independently verified for completeness or accuracy. These opinions may not be relied upon as investment advice or as an offer for any particular security.

Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.

1. Source: McKinsey Quarterly, “The Black consumer: A $300 billion opportunity,” August 6, 2021.

2. Source: McKinsey Institute for Black Economic Mobility, “Black consumers: Where to invest for equity (a preview),” December 15, 2021.

3. Source: University of Georgia, “Minority Markets Have $3.9 Trillion Buying Power,” March 21, 2019.

4. Source: McKinsey Institute for Black Economic Mobility, “Black consumers: Where to invest for equity (a preview),” December 15, 2021.

5. Source: United States Census Bureau, “2020 Census Illuminates Racial and Ethnic Composition of the Country,” August 12, 2021.

6. Source: As of August 5, 2022, Franklin Templeton Investments, in partnership with Chadwick Martin Bailey, conducted a survey among a sample of 2,281 US adults ages 18 or older with at least $100K in investable assets. The sample includes key populations and audiences including: Millennials (298); Women 50+ (300); Latinx & Hispanics (295); Asian Americans & Pacific Islanders (299); Black & African Americans (595); LGBTQ+ (292); general population (502). Franklin Templeton Investments or any of its affiliates are not affiliated with Chadwick Martin Bailey.

7. Sources: Entrepreneur, “Entrepreneurship and Millennials Are Thriving in Emerging Markets,” September 6, 2017; blackenterprise.com, “The Best New Way for African Americans to Invest In or Start a Business: Equity Crowdfunding,” February 8, 2018; and U.S. News & World Report, “Why the Rate of Black Business Ownership Is Going Up,” April 13, 2022.

8. Ibid.

9. Source: “The Best New Way for African Americans to Invest In or Start a Business: Equity Crowdfunding,” February 8, 2018.

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