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iPhone 5 sales this week could boost U.S. economy

By Catholic Online (NEWS CONSORTIUM)
September 11th, 2012
Catholic Online (www.catholic.org)


There's good news about the U.S. economy this week. When the hotly anticipated iPhone 5 goes on sale later this week, people lining up around the block for the hottest new Apple gadget, it could give a definite boost to the U.S. economy - according to JP Morgan, as high as 0.5 percent.

LOS ANGELES, CA (Catholic Online) - There's little question that the iPhone 5 will not only boost tech giant Apple's bottom line - it could also give a significant boost to the overall U.S. economy.

According to J.P. Morgan's chief economist Michael Feroli, the new iPhone could add between a quarter and a half percentage points to fourth quarter annualized growth in the U.S., he wrote in an email to clients.

"Calculated using the so-called retail control method, sales of iPhone 5 could boost annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate," Feroli wrote. The 0.33 percentage-point boost "would limit the downside risk to our Q4 GDP growth protection, which remains 2.0 percent."

J.P. Morgan's analysts expect Apple to sell around eight million iPhone 5s in the fourth quarter, at the estimated price of $600.

With about $200 in discounted import component costs, the government can factor in $400 per phone into its measure of gross domestic product for the fourth quarter.

The estimate of between a quarter to a half point of annualized GDP "seems fairly large, and for that reason should be treated skeptically." But, Perolli added, "we think the recent evidence is consistent with this projection."

Feroli, along with many others pointed out that when the last iPhone was launched in October 2011, sales significantly outperformed expectations.

"Given the iPhone 5 launch is expected to be much larger, we think the estimate mentioned ... is reasonable," Feroli wrote.

Some reports list a September 21 release date that the new iPhone goes on sale. Apple hasn't confirmed the date.

According to a recent Reuter's poll of Wall Street dealers and economists, U.S. GDP was seen at 2.0 percent on average in 2013, down slightly from estimates this summer.


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