ICYMI: Tech Companies Are The Stars Of This Year’s U.S. “Investment Heroes” List
Earlier this week, The Progressive Policy Institute released its 2019 “Investment Heroes” report from Michael Mandel and Elliott Long on who is investing the most in the U.S. economy and the American People.
— PPI identified the top nonfinancial companies investing in the American economy that “stand out for their multi-billion investments in America” using publicly available financial statements
— Six tech/e-commerce companies make the top 20 Investment Heroes list, with combined capital expenditures of over $72.55bn in 2018.
— Alphabet tops the list of American Investment heroes, investing an estimated $20.2 billion in U.S. capital expenditures.
Insights From The Report:
Capital expenditures are a key component of achieving long-term US economic growth and productivity gains, note Mandel and Long. “Capital spending on equipment, structures, and intellectual property such as software is an essential contributor to productivity and economic growth. The key to growth is how much businesses spent on productive capital, relative to the size of the economy and the workforce.”
The Tech/E-Commerce industry had the largest capital expenditures of any industry surveyed in America in 2018. “Looking at broad categories, the ten tech, communications/broadband and ecommerce companies on our list had total estimated domestic capital spending of $127 billion, up from $100 billion the previous year.”
The Data Processing and Internet Publishing industry boosted its U.S. capital intensity by 135% between 2007 and 2017, far ahead of the 21% increase for the nonfarm business sector as a whole. “The Bureau of Labor Statistics (BLS) calculates the capital intensity as the ratio of the services produced by capital assets to the number of hours worked. Rising capital intensity means that each worker has more equipment, structures, and intellectual property available to them. As capital intensity rises, so does productivity.”
As expected, leading tech services’ investments have made them more productive: the Data Processing and Internet Publishing sector has nearly doubled its productivity in just ten years. “What about the link between capital intensity and labor productivity? Table 2 shows that the top two industries for capital intensity growth are also the top two industries for labor productivity growth. Between 2007 and 2017 communications/broadband doubled its labor productivity, while data processing and internet publishing was very close behind with a 96 percent gain.”
Alphabet was the number one Investment Hero of 2018, with over $20.2 billion invested in the American economy. “According to our estimates, the number one company, Alphabet, spent an estimated $20.2 billion in 2018 in the United States, far more than any previous years. In essence the company was investing in America, as it boosted its ‘long-lived assets’ in the United States by 36 percent, compared to only a 24 percent increase in long-lived assets outside of the country. The money helped build out the company’s network of data centers, real estate and facilities, and information technology infrastructure.”