What Latinx Cultural Dominance Means for the Future of the American Economy

Key Takeaways

Latinx Heritage Month is typically a time to look back. The annual celebration falls during independence holidays in several Latin American countries and recognizes the history, heritage, and contributions of prominent Latinx Americans.  But we can’t overlook the present – Latinx history is happening right before our eyes. Rapper and singer Bad Bunny has been the most streamed Spotify artist for three consecutive years. Latinx filmmakers and actors recently took home some of Hollywood’s most prestigious honors, including Ariana DeBose, who won the 2022 Best Supporting Actress Oscar for her role in “West Side Story.” And earlier this year, author Hernan Diaz won the Pulitzer Prize in Fiction for his 2022 novel, “Trust.” Across mediums and platforms, Latinx creatives are dominating American pop culture. It’s easy to write this off as a trend in the entertainment industry, but the demographics of the audience are changing, too. From 2010-2022, the U.S. Latinx population grew from 50.5 million to 63.6 million – a whopping 26% increase. That means 1 in every 5 Americans identifies as Latinx. Some of the biggest increases are happening in states like Texas, Florida, and California, but all 50 states and Washington, D.C. have seen some degree of Latinx population growth in the past 12 years. With that growth comes unparalleled economic influence. If Latinx Americans were a country, they’d have a GDP of $2.8 trillion – the fifth largest in the world. Collectively, these consumers have $1.7 trillion in purchasing power, represent 80% of new entrants to the U.S. workforce, and account for 52% of new job creators. From media to population growth to the economy, Latinx cultural influence touches every part of American life. But beyond these astounding data points, what exactly does that mean?

How Latinx population growth impacts the U.S.

At a time of divisive politics and heated cultural rhetoric, especially around issues of immigration and citizenship, steady population growth dispels the myth of Latinx Americans as “foreigners.” If we don’t serve the cultural, social, and economic needs of this population, we’re ignoring roughly 20% of the country. Instead, we must recognize that Latinx financial health is American financial health. Considering factors like spending power, high levels of entrepreneurship and workforce participation, and continued growth, the future health of the American economy likely depends on the country’s Latinx population. This economic truth will require better representation, not only in what we watch and listen to, but also in public office. The most recent U.S. Census results could positively impact congressional representation for districts with large Latinx populations and could also influence local races, affecting funding for schools, services, and neighborhoods. As the Latinx population grows, it’s imperative that their lived experience mirrors the vital role they play in fueling American economic growth. Yet that’s not often the case.

A troubling economic snapshot

The American dream is one that’s built on credit, but by and large, Latinx consumers face major disadvantages in the U.S. credit system. Latinx Americans are twice as likely to be credit invisible, compared to the average American. (Credit invisible is defined as having no established credit history with the three major credit-reporting bureaus.) This primarily happens because credit scores fail to account for nontraditional factors like credit history established in other countries or on-time payments of everyday bills like rent and utilities. This barrier to credit creates further hurdles. For example, over a third of Latinx consumers report low credit scores as the reason they don’t own a home Research from the Consumer Finance Protection Bureau has shown that credit scores and history are strongly correlated with income – another area where Latinxs are systemically held back. Latinx Americans make 73 cents for every dollar white Americans earn, and Latinx household wealth is just a fifth of that of white households. A McKinsey study found that Latinx workers are underpaid by $288 billion annually. With wage equity, the study estimates that the Latinx workforce could add another $660 billion in spending power each year. With the pay gap still in place, however, an uphill battle remains.  Further compounding these factors, many Latinx Americans distrust financial institutions and continue to face racial discrimination in various financial services. Redlined communities – areas denied access to financial services due to race or ethnicity – have 30% Latinx populations, on average. This increases the chances that their neighborhood is underbanked (forcing reliance on alternative financial services, such as payday loans, check-cashing services, and prepaid debit cards) or that individuals do not have a bank account at all.  Despite the collective economic power of Latinx consumers, they are not able to reach their full potential due to biased systems and longstanding inequities. Safeguarding Latinx financial health – and with it, American financial health – requires a mindset shift and impactful changes.

Ways to better serve Latinx financial consumers

Though many of the issues threatening Latinx prosperity can seem daunting, there are several steps that government agencies, financial institutions, and companies in the public and private sectors can take.  First, banks, credit unions, and other lenders must repair their relationships with Latinx consumers. They can start with culturally responsive financial literacy, be it materials written in Spanish or education that acknowledges the community’s specific challenges. These resources must also be accessible, meaning low or no cost and easy to find. There must also be a deeper investment in Latinx-owned businesses. There are an estimated 2.5 million Latinx entrepreneurs in the U.S. who will put the additional funding to good use – to the tune of an additional $2.3 trillion in revenue annually. And lastly, banking and building credit can be – and should be – easier. That requires user-friendly mobile banking apps and services, especially for Latinx millennials and younger generations. These consumers also need the ability to establish credit in ways that are relevant to their lives. If the average Latinx consumer can get credit for paying rent, phone bills, and utilities, they can clear the hurdles that have kept so many people from buying cars, homes, or other major credit-dependent items. This is how we make credit accessible and close the credit gap. In that sense, Latinx Heritage Month can serve as an opportunity to imagine the future – one that accounts for the massive cultural influence of the Latinx population by dismantling barriers to the American dream.


StellarFi (StellarFinance, Inc.) and its affiliates do not provide financial, tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own financial, tax, legal, and accounting advisors before engaging in any transaction. StellarFi receives a referral fee from the partners mentioned in this article.