Latinos in the United States are an economic powerhouse, contributing trillions in gross domestic product (GDP) each year.
In fact, if U.S. Latinos were a standalone country, they would rank as the fifth largest GDP in the world—larger than India, Russia, Canada, England and other major economies, according to the latest report by the Latino Donor Collaborative (LDC) in partnership with Wells Fargo. Projections show that the U.S. Latino economy will surpass Germany’s GDP by 2027.
Economic Contributions
In California, there are more than 815,000 Hispanic-owned businesses, creating more than 500,000 jobs, according to the California Hispanic Chambers of Commerce (CAHCC). These businesses contribute more than $100 billion in annual revenue to the state’s economy.
U.S. Latino GDP was $3.6 trillion in 2022, according to the most recent data available. The growth trajectory of U.S. Latino GDP was the second fastest-growing among the world’s 10 largest economies between 2017 and 2022, with a 4.6% annual average real growth rate, coming in second to China (5.3%). According to the LDC, the U.S. Latino economy is expected to continue expanding faster than most first-world economies, supported by population growth, youth, business formation, improvements in educational attainment, and general upward mobility.
The U.S. Latino economy enjoyed robust growth between 2021 and 2022. U.S. Latino GDP increased by $321 billion to $3.6 trillion. Gross Domestic Income (GDI) added $316 billion to $2.83 trillion, while U.S. Latino Purchasing Power (LPP) rose by $338 billion to $3.78 trillion. From 2017 to 2022, U.S. Latino GDP increased on average by 4.6% annually. That was 2.6 times the rate of the rest of the economy. U.S. Latino GDI and LPP both increased on average by 4.8% per year, which was 2.7 times and 2.5 times faster than the rest of the economy, respectively. Furthermore, the Latino cohort was responsible for 28.3% of total additions to national GDP over that time period.
Industries Driving Growth
In 2022, manufacturing was the biggest driver of U.S. Latino economic growth, which reached $457.4 billion, a 48.4% year-over-year increase. U.S. Latinos in 2022 accounted for 17% of the nation’s total manufacturing.
Retail trade also contributed substantially to the growth of the U.S. Latino economy, with a 14.1% increase to $270.3 billion, representing 16% of the United States total. Similarly, construction reported a 9.3% increase to $250.3 billion, or a 23% nationwide share.
U.S. Latino Workforce, Entrepreneurship
Latinos make up about 19% of the U.S. workforce and have the highest work participation rate among all major groups of the U.S. population. While the rest of the economy saw a decrease of 1.3 million working-age individuals between 2021 and 2022, the U.S. Latino cohort added 1.4 million workers, offsetting the national loss.
Latinos do not simply contribute to the economy as workers, they also play a key role in driving U.S. entrepreneurship. The latest Stanford University State of Latino Entrepreneurship research report found that between 2007 and 2022, the number of Latino-owned businesses grew by 57% nationwide. Latinos own nearly 5 million businesses, generating more than $800 billion in annual revenue.
U.S. Latinos owned 10% of all accommodation and food services businesses nationally in 2021, 6% of all health care and social assistance firms, 11% of administrative and other services firms, and 12.2% of all construction firms, according to the LDC. These were the four largest U.S. industries by number of workers in 2021.
