iPhone 5 to boost US GDP by 0.33 percent in Q4 2012?

Posted on Tuesday, Sep 11 2012 @ 13:07 CEST by Thomas De Maesschalck
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As the iPhone 5 is anticipated to be released on Wednesday, JP Morgan chief US economist Michael Feroli estimates sales of Apple's new smartphone could boost the US economy in a quite measurable way. Feroli estimates the iPhone 5 could boost GDP by $3.2 bilion in the fourth quarter, or $12.8 billion at an annual rate, representing a 0.33 percentage point in the annualized rate of GDP growth.
The bottom line: The new iPhone sales could boost GDP by $3.2 billion in the fourth quarter, or $12.8 billion at an annual rate. That is an increase of 0.33 percentage point in the annualized rate of GDP growth. It could be even higher, he says. Even a third of a percentage point would limit the downside risk to J.P. Morgan’s fourth-quarter growth projection of 2%.

Feroli warns that the estimate “seems fairly large, and for that reason should be treated skeptically” but adds: “we think the recent evidence is consistent with this projection.” When the iPhone 4S became widely available last October, he writes, over half of the 0.8% increase in core retail sales came in the categories of online sales and computer and software sales. The two categories together had their largest monthly increase on record. The fourth-quarter sales growth at those stores over the third quarter would have boosted fourth-quarter growth by a tenth to a fifth of a percentage point if due to the iPhone. The iPhone 5 launch will be even bigger than that, he says, making the latest estimate “reasonable.”
Quite startling that one small product can have such a large impact on the economy.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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