iPhone 5 Could Add Half A Percent To US GDP

Analyst expect iPhone 5, which is widely expected to unveiled at Apple’s media event on Wednesday, September 12, to be the biggest consumer electronics product launch of 2012 as well as the biggest device upgrade cycle in smartphone history.

The iPhone 5 launch could be so big that it could give a boost to U.S. economy, according to J.P. Morgan’s chied U.S. economist Michael Feroli reports Wall Street Journal.

Here’s how Feroli came up with the figures:

J.P. Morgan’s equity analysts expect Apple to sell about 8 million iPhone 5 units in the final three months of the year. If the phone sells for around $600, with about $200 of it counted as imported components, then $400 per phone would figure into the government’s measure of gross domestic product. (Even though consumers may not pay that much for the phone, because of subsidies from wireless carriers, Feroli explains that phone-selling companies often report the sales based on the price of the standalone product.)

The bottom line: the iPhone 5 sales could boost GDP by $3.2 billion, or $12.8 billion at an annual rate. That amounts to an increase of 0.33 percentage point in annualized 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.” 

According to Feroli, iPhone 4S which was launched last year, added almost 0.2 percent to the GDP last year. He expects iPhone 5 to be even bigger than that, which is why he believes his estimates are reasonable.

Apple’s iPhone 5 with a taller 4-inch display, faster quad-core A6 chip, more RAM, support for 4G LTE network, new dock connector etc. should make it a much more significant upgrade than iPhone 4S, but it remains to be seen if it can meet such high expectations.

After reading this, Congress, the White House and Federal Reserve will also be eagerly waiting for Apple’s new iPhone along with us.

[via WSJ]