Texas Latinos offer second-largest economy in the U.S., a new report states

Texas has the second-largest Latino economy in the U.S., with $687 billion coming from the workforce, goods, services and spending power attributed to this group, according to a new report unveiled this month.

The 2024 U.S. Latino GDP Report by the Latino Donor Collaborative , a California-based think tank, is the latest look at the economic power of Latinos living in the U.S. Researchers expect U.S. Latinos to represent the fourth-largest major economy worldwide by 2029, meaning their economic power will be greater than whole countries.

The gross domestic product, or GDP, of Latinos in the U.S. grew from $3.2 trillion in 2021 to $3.6 trillion in 2022, a 13 percent increase, the report states.

“This year, 2024, we expect the U.S. Latino economy to have surpassed Japan,” said José Jurado, principal investigator for this report and an economist with the L. William Seidman Research Institute at Arizona State University.

In Texas – the state with the second largest Latino population in the U.S. – the Latino GDP grew by $147 billion between 2017 and 2022. The state was only bested by California, which saw growth of $154.6 billion in Latino GDP over the same period, and was followed by Florida with $86 billion.

According to a report released earlier this year , the Houston - Woodlands - Sugar Land Metro area — home to about 2.8 million Latinos — had a $139.5 billion Latino GDP in 2021. That accounted for 25 percent of the overall local economy and is larger than the economy of Arkansas.

GDP is used as a measure of the economic health of a country or group. It measures the monetary value of products and services that, in the case of this report, are provided and consumed by the Latino population living in the U.S.

The economic projections are driven by population growth, youth population, business creation, educational attainment and upward mobility, the report states.

U.S. Latino GDP grew at an average annual rate of 4.6 percent, between 2017 and 2022,  which accounted for the second highest among the world’s 10 largest economies, the report states. The GDP growth among Latinos is only bested by China, which had a growth rate of 5.3 percent over the same period of time, and with countries like India, the U.S., Canada and the United Kingdom trailing behind.

Houstonians’ contributions

In 2021, Latinos accounted for 38.5 percent of the Houston metro area population and were responsible for nearly 70 percent of the region’s economic growth between 2018 and 2021. Across the U.S., Latinos represented about 19 percent of the population in the same time period, and were responsible for about 28 percent of the overall economic growth, according to the 2024 Metro Latino GDP Report released in April.

These findings don’t necessarily surprise Laura Murillo, who has led the Houston Hispanic Chamber of Commerce as president and CEO for the last 16 years. But she celebrates the interest in research that can present the impact that she’s seen coming from the Latino population for years.

These findings validate Latinos as relevant contributors to economies across the globe, Murillo said. What stakeholders decide to do with this information is yet to be determined, she added.

“I don’t know how much of this data corporations can receive before we see the transition, the investment, monetizing this,” Murillo said. “We are still not there.”

There’s still a lot of work to be done when it comes to representation at the highest levels of corporations and boards, she said. Latinos represent 2 percent of all the CEO appointments across Russell 3000 companies across the U.S., according to a 2023 Harvard Law School study on corporate governance.

“We want to be a solution to these corporations that are competing now globally,” Murillo said. “This is an opportunity for those corporations that are forward-thinking to look at this competitive advantage that is called U.S. Latinos.”

The role of education

Educational attainment among Latinos in the U.S. also increased between 2021 and 2022 at all levels, according to the latest report. High school graduation rates increased by 2.3 percent year over year, but the greatest gains were seen at the college level, with associate, bachelor’s and graduate degrees all increasing by at least 5 percent.

Over the last five years, the number of U.S. Latino adults with a bachelor’s degree increased by 38 percent, while the number of those without a high school diploma declined from 15 percent to 11 percent.

This momentum in educational achievement will be key to reach or even surpass economic growth predictions, said Pablo Troncoso, assistant professor of economics at the University of Houston.

Technology and automation could soon replace some of the more accessible jobs for those without a college degree or certifications, and the working-age population will be the most affected.

“In Houston, you will find a job. There is no problem right now if you want to work,” Troncoso said. “But maybe in 10 years, it won’t be as easy as it is right now.”

According to the report, manufacturing and public administration led as the top industry sectors in which U.S. Latinos had the most impact in 2022, reaching $457 billion and $426 billion in economic contributions to the U.S., respectively. Construction came in fifth place at $250 billion.

For Troncoso, this is a sign that U.S. Latinos are already moving upward in the types of jobs that they qualify for and attain. These trends might change from state to state and city to city, he said, but the overall takeaway for him was the upward mobility that this represents.

More than 68 percent of Latinos participated in the U.S. labor force in 2022, the report states, compared to 62 percent of non-Latinos. These rates are aided by population growth among working-age Latinos — ages 16 through 64 — which grew by 725,000 in 2022, while the same cohort of non-Latinos fell by 673,000 in the U.S.

“On the one hand, you have older cohorts of Latinos who pursue (higher education) degrees at lower rates … and on the other hand, we also have younger Latinos who are getting bachelor’s degrees at much higher rates,” Jurado said. “So there’s this generational change that is going to take some time, but it’s got its own force.”