Home Business iPhone 5 launch expected to boost American economy

iPhone 5 launch expected to boost American economy

Apple fans aren’t the only people chomping at the bit for the new iPhone to be released but now American economists are excited about the expected unveiling of the latest version because they think it will boost the .

The next generation , which Apple plans to release on Wednesday, could not only boost the tech giant’s bottom line but could give a significant boost to the overall US economy.

Sales of the iPhone 5 could add between a quarter and a half percentage point to fourth quarter annualized growth in the US, according to J.P. Morgan’s chief economist, Michael Feroli in a note to clients on Monday.

Such an impact would be significant.

The next generation iPhone 5 could not only boost Apples bottom line but could give a significant boost to the overall US economy 350x248 photo

The next generation iPhone 5 could not only boost Apple's bottom line but could give a significant boost to the overall US economy

“Calculated using the so-called retail control method, sales of iPhone 5 could boost annualized growth by $3.2 billion, or $12.8 billion at an annual rate,” Michael Feroli wrote.

That 0.33 percentage-point boost, he added, “would limit the downside risk to our Q4 GDP growth protection, which remains 2.0 percent”.

Michael Feroli laid out his math. J.P. Morgan’s analysts expect Apple to sell around 8 million iPhone 5s in the fourth quarter. They expect the sales price to be about $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.

Michael Feroli said 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, he added, “we think the recent evidence is consistent with this projection”.

Michael Feroli said 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,” Michael Feroli wrote.

According to a recent Reuters poll of Wall Street dealers and economists, US GDP was seen at 2.0% on average in 2013, down slightly from estimates this summer.

 

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Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.