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Apple's $350 Billion U.S. Economic Contribution Was Already In The Cards

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Apple announced on Wednesday that it would be making a new set of investments to support the American economy and its workforce. Over a five year period Apple estimates that it will add 20,000 jobs at the company and contribute $350 billion to the U.S. economy. When you analyze the numbers that Apple provides in the press release I believe that except for the $38 billion tax payment for bring back its overseas cash the company would have essentially spent the same amount in the U.S. (Note that I own Apple shares).

There are two key parts in the press release to calculate how much Apple plans to spend in the U.S. I have emailed Apple to confirm my analysis and will update this article with any information I receive from them.

Apple’s current domestic spending of $55 billion is $275 billion over five years

The following statement was in the press release “Combining new investments and Apple’s current pace of spending with domestic suppliers and manufacturers — an estimated $55 billion for 2018 — Apple’s direct contribution to the US economy will be more than $350 billion over the next five years…”

I believe these types of statements from any company are worded very carefully. Assuming the $55 billion for 2018 is Apple’s current pace of spending with domestic suppliers and manufacturers this equates to $275 billion for five years with no growth.

Additional $75 billion from planned capital spending and repatriation tax

The press release included “Planned capital expenditures in the U.S., investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75 billion of Apple’s direct contribution.” Half of the $75 billion is an estimated tax payment of $38 billion for bringing back a large portion of the company’s overseas cash. It looks like the remaining $37 billion in capital expenditures were already in its plans.

Apple included in its latest annual 10-K SEC filing that it plans to spend $16 billion for capital expenditures worldwide in fiscal 2018. If there is no growth to it for five years the company’s total capital expenditures will be $80 billion. Using $37 billion, or just under 50%, in the U.S. seems like a reasonable number that would have been in the pipeline.

When you add the $275 billion for domestic suppliers and manufacturers, $37 billion in capital expenditures and $38 billion in repatriation tax it looks like $350 billion was already in the cards.

There is the possibility that I’m incorrectly reading the paragraph about the current $55 billion pace of spending for domestic suppliers and manufacturers. However, I am not projecting any growth over the five years. Every 1% compounded growth rate would add $6 billion. At a 3% to 4% rate the additional $17 to $23 billion would be a significant portion of any shortfall in my projections.

I’m also assuming no growth to the $37 billion in U.S. capital spending. Every 1% growth adds almost $2 billion over five years. At 3% to 4% it would add $6 to $8 billion.

Additional U.S. jobs would probably also happen

Apple employs 84,000 of its 123,000 personnel in the U.S. and the press release says the company plans to add 20,000 more U.S. employees over five years. For the past two fiscal years the company’s total employee count has increased by 5.5% and 6.0%, respectively. It would only take a 4.5% yearly increase to its current 84,000 workers to reach the 20,000 person goal.

The Advanced Manufacturing Fund increase and expanded educational funds are incremental

Apple introduced a $1 billion Advanced Manufacturing Fund last year to “support innovation among American manufacturers and help others establish a presence in the U.S.” It is being increased to $5 billion, which is incremental to the company’s original forecast.

Apple also plans to “accelerate its efforts across the U.S. in support of coding education as well as programs focused on Science, Technology, Engineering, Arts and Math (STEAM).” The company didn’t provide a figure but there is a wide range of initiatives to especially help coding skills of students in K-12 schools. I would put the amount in the hundreds of millions of dollars.

Please check out my other Forbes.com article “Trump’s Economic Scorecard: One Year Since Inauguration” to get a read on how the economy has done in the past year.