Silicon Valley's heavyweights are booming while the rest of the U.S. economy is slowing down

Microsoft, Apple, Facebook, Amazon, and Google’s parent company, Alphabet — call them the “Big Five” of Silicon Valley — have all hit record stock prices in the past week. Meanwhile the U.S. economy, per numbers released Friday by the Bureau of Economic Analysis, grew by an anemic 0.7 percent in the first quarter of this year.

Though one quarter of slow growth might be only a hiccup, U.S. tech giants have been outperforming the broader market for some time now. Taken together, the share prices of the Big Five have risen more than twice as much as the S&P 500 Index over the past year.

This shouldn’t come as a complete surprise. While the U.S. economy has steadily, if slowly, recovered from the Great Recession, Silicon Valley’s heavyweight have grown by leaps and bounds.

• Google and Facebook dominate advertising with a combined 57 percent share of the global digital ad market, according to new figures from the ad-buying firm GroupM. The two companies are expected to grow that number even more; an entire section of the GroupM report is labeled “Platforms Growing Other Than Google and Facebook.”
• Amazon, Google, and Microsoft have all built new profit engines in the cloud computing business, although Amazon maintains its lead in the space.
• iPhone sales growth, Apple’s biggest moneymaker, has been slowing in recent years, although investors are bullish on Apple’s Tuesday earnings report, its anticipated launch of the iPhone 8, and its reported $250 billion cash hoard.

Here’s the problem with all that froth: Silicon Valley doesn’t employ many people in the U.S. compared to the industries it is outpacing (and in some cases, replacing). The Bureau of Labor Statistics in May 2016 estimated that the high-tech industry will account for about 23 percent of economic output through 2024, while employing roughly 13 percent of the U.S. labor force. A 2015 BLS report indicates that this gap could further widen, as high-tech output is estimated to rise faster than its share of total U.S. employment.

Among Silicon Valley’s top performers, meanwhile, a growing chorus of critics charge that their biggest profits are drawn from completely dominating the markets in which they operate. Google, for instance, is reportedly developing an ad-blocker for its Chrome browser that has experts worried about its possible anti-competitive impact.