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The iPhone and the economy

Does an Apple a year keep the economy in gear? Probably not, but Apple’s iPhones have definitely had a ripple effect on the world economy during the last five years. The iPhone and its competitors have driven network buildouts, factory orders, and innovation in semiconductor design.

J.P. Morgan’s Michael Feroli is estimating that the iPhone 5 could boost America’s 4th quarter GDP by $3.2 billion, or about 0.33% on an annualized basis. That’s based on the assumption that 8 million new iPhones will be sold in the 4th quarter, and that each will add $400 to the GDP (the unsubsidized retail value of the phone, minus the cost of the imported components.) Feroli says that last fall’s iPhone 4S launch preceded a marked uptick in retail sales, particularly online sales and those reported by computer and software retailers, which would include Apple.

Of course iPhone purchases only boost GDP if they are supplemental to other consumer spending, not if they supplant that spending. In other words, if you replace your iPhone instead of your washing machine you have not helped the economy much. On the other hand, a new smartphone purchase can be seen as a stimulus to future spending because it usually leads to more purchases of data and apps.

And it’s clear that the a new iPhone does induce some consumers to open their wallets a bit wider, and even to spend money they don’t have. A coupon reseller recently asked Americans about their technology buying habits and found that, with or without coupons, many Americans are so determined to own the upcoming iPhone that they will go into debt to get it. More than half of the respondents said they had used a credit card or gotten a loan out in the last three years so they could be amongst the first to buy the latest iPad and iPhone.

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Martha DeGrasse
Martha DeGrasse
Martha DeGrasse is the publisher of Network Builder Reports ( At RCR, Martha authored more than 20 in-depth feature reports and more than 2,400 news articles. She also created the Mobile Minute and the 5 Things to Know Today series. Prior to joining RCR Wireless News, Martha produced business and technology news for CNN and Dow Jones in New York and managed the online editorial group at Hoover’s Online before taking a number of years off to be at home when her children were young. Martha is the board president of Austin's Trinity Center and is a member of the Women's Wireless Leadership Forum.

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