Will Tomorrow's iPhone Unveiling Affect the Presidential Election? The Answer May Surprise You TVWeek, WSJ
Apple’s big announcement planned for tomorrow -- universally presumed to be the introduction of the eagerly awaited iPhone 5 -- may have an impact well beyond the tech sector, The Wall Street Journal reports.
The new iPhone, the piece says, “could do something the White House, Congress and Federal Reserve have struggled to do: boost the U.S. economy.”
And with the current presidential race being all about the economy, the repercussions could be felt in the election booth. Any good news for the economy is widely considered to be beneficial to the re-election chances of President Obama -- and conversely, bad news for his GOP opponent, Mitt Romney.
“Sales of the new iPhone could add between a quarter and a half of a percentage point to the annualized rate of economic growth in the fourth quarter, J.P. Morgan Chase & Co.'s chief U.S. economist Michael Feroli estimates. That could help cushion the sluggish U.S. economy from other risks in the final months of the year,” The Journal reports.
“In a note to clients Monday, titled ‘Can one little phone impact GDP?,’ Mr. Feroli walks through the math: J.P. Morgan's equity analysts expect Apple to sell about eight million new iPhone units in the final three months of 2012. If the phone sells for around $600, with about $200 of it counted as imported components, then $400 per phone would add to the government's measure of gross domestic product, the total value of the economy's output.”
The report notes that consumers generally don’t pay the full $600 price tag for the devices, because wireless carriers help subsidize the cost. But phone sales tend to be reported based on the full price of the stand-alone device.
“The bottom line: The new iPhone sales could boost GDP by $3.2 billion in the fourth quarter, or $12.8 billion at an annual rate. That is an increase of 0.33 percentage point in the annualized rate of GDP growth. It could be even higher, he says. Even a third of a percentage point would limit the risk the economy would grow more slowly than J.P. Morgan's fourth-quarter growth projection of 2%,” the story reports.
Feroli adds a cautionary note, warning that the estimate "seems fairly large, and for that reason should be treated skeptically." But he adds: "We think the recent evidence is consistent with this projection."
The report cites a precendent: “When the iPhone 4S became widely available last October, [Feroli] writes, over half of the 0.8% increase in the nation's so-called core retail sales -- which exclude autos, gasoline and building materials -- came in the categories of online sales and computer and software sales. The two categories together had their largest monthly increase on record.”
The launch of the iPhone 5 is expected to be even bigger than the 4S launch, the report notes.