We know the release of
the iPhone 5 is a big deal, but this big? Economist Michael Feroli of JPMorgan
Chas
e (JPM) estimated Monday that sales of
the new phone, expected to start later this month, “could potentially add” from
one-quarter to one-half of a percentage point to the growth rate of U.S. gross
domestic product in the final quarter of the year.
Here’s Feroli’s math: Assume sales of previous-generation iPhones continue “at
a solid pace,” while the new model from Apple (AAPL) sells about 8 million
units in the last three months of 2012. Assume the average selling price for
the new models is about $600. (True, people who get the new phone as part of a
calling plan pay less than the sticker price, but the sale gets reported to the
government for what it would have cost on a stand-alone basis.)
Out of that $600, about $200 is the imported cost, leaving $400 as the value
captured in the U.S. Multiply $400 times 8 million and you get a pop of $3.2
billion, which is enough to boost the annualized growth rate of the economy by
one-third of a percentage point. Feroli, the bank’s chief U.S. economist,
expects the U.S. economy to grow at an annual rate of about 2 percent in the
fourth quarter, and says the iPhone will “limit the downside risk” to that
projection.
“This estimate seems fairly large, and for that reason should be treated
skeptically,” writes Feroli in a research note titled “Can one little phone
impact GDP?” But he says the projection fits with what happened when the iPhone
4S, a less ballyhooed product, was released last October. “Overall retail sales
that month significantly outperformed expectations,” he writes, and “online
sales and computer and software sales … had their largest monthly increase on
record.”
