Datastream
What Does it Cost to Run Big Business?
The Briefing
- The cost of running a Fortune 500 company can easily exceed $100 billion annually
- Walmart’s operating costs in 2020 were equal to 70% of U.S. military spending
What Does it Cost to Run Big Business?
How much does it cost to run one of America’s largest corporations? For household names like Apple, Costco and Walmart, well over $100 billion each year.
To get a better sense of their massive scale, this chart compiles financial data from some of the largest Fortune 500 companies, and includes U.S. military spending as an additional point of comparison.
| Entity | Cost of Operations, USD billions | Revenues, USD billions | Operating Margin, % |
|---|---|---|---|
| U.S. Military Spending | $778 | N/A | N/A |
| Walmart | $537 | $559 | 4% |
| Amazon | $363 | $386 | 6% |
| Apple | $170 | $275 | 38% |
| CVS Health | $255 | $269 | 5% |
| Berkshire Hathaway | $231 | $246 | 6% |
| Alphabet | $142 | $183 | 22% |
| ExxonMobil | $210 | $182 | -15% |
| AT&T | $165 | $172 | 4% |
| Costco Wholesale | $161 | $167 | 4% |
To determine each company’s total cost of operations, we combined its selling, general & administrative expense (SG&A) and its cost of goods sold (COGS).
SG&A covers all of the costs associated with selling products and services, as well as managing day-to-day operations. This includes employee salaries, office rent, and marketing expenses. COGS refers to any costs directly associated with producing goods, such as raw materials and labor.
Operating Costs vs. Military Spending
At $778 billion, U.S. military spending in 2020 was the highest in the world. It dwarfs that of China, which took second place with $252 billion in spending. Beyond these two, there are no other countries that spent more than $100 billion on defense.
Massive government budgets like this may seem untouchable, but today’s chart proves otherwise. As the largest employer and retailer in America, Walmart spent $537 billion (70% of U.S military spending) to keep itself running.
Combine this with Amazon’s operating costs, and we reach $900 billion in expenses (16% more than U.S. military spending).
More Costs Doesn’t Mean More Profits
These businesses may be expensive to run, but how good are they at making money?
This can be measured by operating margin, which determines how much profit is generated from each dollar of revenue, after operating costs are deducted. We calculate it with a simple formula: operating earnings divided by revenues. Operating earnings are revenues less SG&A and COGS.
From the companies in this graphic, Apple had the greatest operating margin at 38%. Walmart was at the opposite end of the scale with a 4% margin.
This highlights the differences in business strategy. Walmart’s competitive advantage is cost leadership, meaning it strives to beat its competitors by offering the lowest prices possible. The retailer’s sheer scale (4,743 locations across the U.S.) is what enables this strategy to be effective.
Apple, on the other hand, combines strong branding and premium quality to command a high price for its products. This results in greater margins and valuations—at the time of writing, Apple is the world’s most valuable corporation with a market cap of $2.4 trillion.
Source: SEC (2021), SIPRI
Notes: Cost of operations includes selling, general & administrative expenses (SG&A) and cost of goods sold (COGS).
Central Banks
Charted: Public Trust in the Federal Reserve
Public trust in the Federal Reserve chair has hit its lowest point in 20 years. Get the details in this infographic.
The Briefing
- Gallup conducts an annual poll to gauge the U.S. public’s trust in the Federal Reserve
- After rising during the COVID-19 pandemic, public trust has fallen to a 20-year low
Charted: Public Trust in the Federal Reserve
Each year, Gallup conducts a survey of American adults on various economic topics, including the country’s central bank, the Federal Reserve.
More specifically, respondents are asked how much confidence they have in the current Fed chairman to do or recommend the right thing for the U.S. economy. We’ve visualized these results from 2001 to 2023 to see how confidence levels have changed over time.
Methodology and Results
The data used in this infographic is also listed in the table below. Percentages reflect the share of respondents that have either a “great deal” or “fair amount” of confidence.
| Year | Fed chair | % Great deal or Fair amount |
|---|---|---|
| 2023 | Jerome Powell | 36% |
| 2022 | Jerome Powell | 43% |
| 2021 | Jerome Powell | 55% |
| 2020 | Jerome Powell | 58% |
| 2019 | Jerome Powell | 50% |
| 2018 | Jerome Powell | 45% |
| 2017 | Janet Yellen | 45% |
| 2016 | Janet Yellen | 38% |
| 2015 | Janet Yellen | 42% |
| 2014 | Janet Yellen | 37% |
| 2013 | Ben Bernanke | 42% |
| 2012 | Ben Bernanke | 39% |
| 2011 | Ben Bernanke | 41% |
| 2010 | Ben Bernanke | 44% |
| 2009 | Ben Bernanke | 49% |
| 2008 | Ben Bernanke | 47% |
| 2007 | Ben Bernanke | 50% |
| 2006 | Ben Bernanke | 41% |
| 2005 | Alan Greenspan | 56% |
| 2004 | Alan Greenspan | 61% |
| 2003 | Alan Greenspan | 65% |
| 2002 | Alan Greenspan | 69% |
| 2001 | Alan Greenspan | 74% |
Data for 2023 collected April 3-25, with this statement put to respondents: “Please tell me how much confidence you have [in the Fed chair] to recommend the right thing for the economy.”
We can see that trust in the Federal Reserve has fluctuated significantly in recent years.
For example, under Alan Greenspan, trust was initially high due to the relative stability of the economy. The burst of the dotcom bubble—which some attribute to Greenspan’s easy credit policies—resulted in a sharp decline.
On the flip side, public confidence spiked during the COVID-19 pandemic. This was likely due to Jerome Powell’s decisive actions to provide support to the U.S. economy throughout the crisis.
Measures implemented by the Fed include bringing interest rates to near zero, quantitative easing (buying government bonds with newly-printed money), and emergency lending programs to businesses.
Confidence Now on the Decline
After peaking at 58%, those with a “great deal” or “fair amount” of trust in the Fed chair have tumbled to 36%, the lowest number in 20 years.
This is likely due to Powell’s hard stance on fighting post-pandemic inflation, which has involved raising interest rates at an incredible speed. While these rate hikes may be necessary, they also have many adverse effects:
- Negative impact on the stock market
- Increases the burden for those with variable-rate debts
- Makes mortgages and home buying less affordable
Higher rates have also prompted many U.S. tech companies to shrink their workforces, and have been a factor in the regional banking crisis, including the collapse of Silicon Valley Bank.
Where does this data come from?
Source: Gallup (2023)
Data Notes: Results are based on telephone interviews conducted April 3-25, 2023, with a random sample of –1,013—adults, ages 18+, living in all 50 U.S. states and the District of Columbia. For results based on this sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. See source for details.
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