No only will the iPhone 5 bring in millions of dollars in sales for Apple, but it could also boost the overall economy of the US, according to JPMorgan’s chief economist, Michael Feroli.
Feroli sent a note to his clients on Monday, saying that sales of Apple’s new smartphone could add between 0.25 percent and 1.5 percent to fourth quarter annualized growth in the US, reports Mashable. Feroli wrote:
“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.”
Analysts with JPMorgan are projecting that Apple will sell 8 million iPhone 5s in the fourth quarter alone, each of which has an expected retail price of roughly $600. With import component discounts of $200, the US government will be able to include $400 per phone in its GDP for the fourth quarter.
While Feroli himself added that his estimate should be met with some skepticism, he emphasized that, “the recent evidence is consistent with this projection,” pointing to the iPhone 4s’s strong sales, which outperformed expectations during its launch in October 2011.
NPR points out, however, that the JPMorgan report assumes that every dollar people spend on new iPhones is change they have, instead of something they would have spent on something else during the last three months of the year (like Christmas presents, etc.).
NPR‘s Jacob Goldstein writes that:
“My wife and I won’t get a babysitter one Saturday night. Instead of going out for a nice dinner and a movie, we’ll have mac and cheese and watch cable. (Sorry, honey!) Instead of buying my dad a fancy Christmas present, I’ll buy him a book. (Thanks for teaching me to love reading, Pop!) My purchase of an iPhone 5 has contributed precisely zero to economic growth. I have simply decided to spend less on childcare, restaurant food, movies and Christmas presents (all that spending would have contributed to economic growth).”
The JPMorgan report doesn’t account for this kind of person, but instead assumes that no one will cut back on anything in order to pay for the new iPhone.