Apple’s iPhone 5 could give US GDP significant boost
Handset launch likely to lift Q4 GDP by as much as 0.5%
This week's much anticipated release of Apple Inc's iPhone 5 could give a much-needed surge to the wider US economy, according to JP Morgan's chief economist.
In a note to clients yesterday, Michael Feroli wrote that the product launch could add between 0.25% and 0.5% to annualised fourth-quarter GDP growth, assuming JP Morgan's prediction is correct that 8 million units will be snapped up by consumers before the end of the year. Given a retail price of $600 per phone and $200 in costs for imported components, each handset sold would add $400 to GDP, adding up to a $3.2-billion addition to GDP, Feroli surmised.
"Calculated using the so-called retail control method, sales of iPhone 5 could boost annualised GDP growth by $3.2bn, or $12.8bn at an annual rate," 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...Given the iPhone 5 launch is expected to be much larger, we think the estimate mentioned ... is reasonable."