iPhone 5 may boost weak economy this fall

5:22 AM, Sep 24, 2012   |    comments
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If the U.S. economy looks a little merrier this December, its Santa Claus will be the iPhone 5.

U.S. sales of Apple's latest must-have gadget could pump more than $3 billion into the economy by year's end, say some economists and technology analysts.

All told, the iPhone 5 could add a quarter-percentage point to the U.S. economy's growth in the next three months, says Mark Zandi, chief economist at Moody's Analytics.

The phones went on sale Friday. Many stores were sold out Sunday and were awaiting new shipments. Piper Jaffray analyst Gene Munster estimated Apple sold 8 million phones since sales began Friday.

Apple is expected to report official weekend sales figures Monday.

Munster's estimate could mean pre-sale estimates of the iPhone 5's economic impact were too conservative. JPMorgan Chase analysts had estimated earlier this month that about 8 million iPhone 5s would be sold in the U.S. through Dec. 31, enough to add a third of a percentage point to the economy's annual growth rate in the fourth quarter.

Wherever sales end up this year, it doesn't mean the iPhone 5 alone will revive the sluggish economy. "Some of the increased spending on iPhones will be offset by less spending on other things," Zandi says.

Even with the iPhone's contribution, the U.S. economy is only expected to grow at a weak annual rate of 2% to 2.5% in the October-December period, Zandi says. JPMorgan Chase estimates a 2% growth rate. But it should counter the negative effects of this summer's drought on consumer spending growth.

JPMorgan analyst Michael Feroli says his estimate for the iPhone 5's economic impact appears reasonable based on previous iPhone introductions.

When the iPhone 4s went on sale last October, online sales and computer and software sales had their largest monthly increase on record, he points out in his iPhone 5 report.

Feroli calculates last year's iPhone added 0.1 to 0.2 of a percentage point to the economy's growth in last year's fourth quarter. And the iPhone 5's launch is expected to be much larger.

In addition to iPhone sales, the new product's arrival will also spur demand for new phone cases, chargers and other accessories.

One place the iPhone's impact is clear is in the stock market.

Apple's shares are up 74% this year, after rising $1.40 on Friday to close at $700.10. Its $278 billion gain in stock market value this year exceeds rival Microsoft's total market value of $261 billion.

Apple's gain represents 12% of this year's boost in the Standard & Poor's 500-stock index, said Howard Silverblatt, senior index analyst at S&P/Dow Jones Indices. Its surge also accounts for 44% of the gains by the 71 technology companies in the index.

USA Today

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