JPMorgan: iPhone 5 may boost GDP

  @jtotoole September 10, 2012: 6:46 PM ET
iphone gdp

A man shows off the Instagram app on an iPhone. The newest iPhone could provide a significant boost to the economy, a JPMorgan economist says.

NEW YORK (CNNMoney)

As anticipation builds for the launch of Apple's iPhone 5, one economist has got an additional selling point for the product: It could provide a significant boost to GDP growth.

JPMorgan's Michael Feroli says in a research note that the iPhone 5, expected to be unveiled Wednesday, could add between 0.25% and 0.5% to annualized economic growth in the fourth quarter.

To reach those figures, Feroli began by assuming that 8 million iPhone 5's will be purchased in the last three months of this year, as JPMorgan predicts. He then assumed a retail cost of $600 per phone and subtracted $200 for the cost of imported components.

Each iPhone sold would therefore add $400 to GDP, or $3.2 billion for the quarter. That's $12.8 billion at an annual rate, and would yield a boost in annualized GDP growth of 0.33% for the fourth quarter.

Overall, JPMorgan (JPM, Fortune 500) predicts fourth-quarter GDP growth of 2%.

Feroli noted that the iPhone's estimated GDP bump "seems fairly large, and for that reason should be treated skeptically." However, he said evidence from the launch of the iPhone 4S last year appeared to support the projection, estimating that that product may have added between 0.1% and 0.2% to growth in the fourth quarter of 2011.

Related: 3 big features the iPhone is missing

Dean Baker, co-director of the Center for Economic and Policy Research, said Feroli's analysis made the questionable assumption that Apple's (AAPL, Fortune 500) iPhone 5 launch wouldn't affect sales of other phones.

"Clearly, some fraction of that 8 million would have bought a phone in the fourth quarter whether or not Apple (AAPL, Fortune 500) came out with that new iPhone," Baker said.

Nokia's uphill battle with smartphones

Feroli did not immediately respond to a request for comment Monday.

No word on how much productivity will be lost by new iPhone users who become addicted to Angry Birds. To top of page



Join the Conversation

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.