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iPhone 5 will make an impact on the U.S. GDP says analyst

Apple has a special event kicking off September 12 and while there has been no official confirmation of what will be unveiled at the event, the iPhone 5 is widely expected to be the headline product. And he iPhone will certainly have a huge impact on Apple's revenue figures for the remainder of the year.
 
However, JP Morgan believes that the iPhone 5 could have a significant impact on the overall U.S. economy. According to the firm, sales of the new iPhone could add as much as 0.5% to fourth-quarter annualized growth in the US. The prediction comes from J.P. Morgan chief economist Michael Feroli. Half a percentage point doesn't sound like much, but that would be a significant impact on the economy.
 
"Calculated using the so-called retail control method, sales of iPhone 5 could boost annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate," Feroli wrote. 
 
Feroli expects that Apple will sell about 8 million iPhone 5 units in Q4 at a sales price expected to be around $600. He expects that $200 of that amount would be import component costs with $400 per device figuring into the U.S. gross domestic product for Q4. Feroli acknowledges that his predictions seem large and need to be treated with a bit of skepticism. However, he pointed out that when the last iPhone launched in 2011 sales significantly outperformed expectations.
 
He said, "Given the iPhone 5 launch is expected to be much larger, we think the estimate mentioned ... is reasonable."

Source: NBC News


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I trust them as far as I can throw them.
By quiksilvr on 9/11/2012 10:22:34 AM , Rating: 3
Not only did they essentially stole billions in bailout money, they lost all of that money AND THEN SOME due to poor investments and bad decisions.




RE: I trust them as far as I can throw them.
By LordSojar on 9/11/2012 10:44:21 AM , Rating: 2
You act like they think something is wrong with that quiksilvr. HA HA. :)


RE: I trust them as far as I can throw them.
By geddarkstorm on 9/11/2012 4:41:29 PM , Rating: 2
Let me just smear it all over my hat again. Ah yes, that's better.


By geddarkstorm on 9/11/2012 4:42:06 PM , Rating: 2
For those who don't get that obscure reference, think about the origin of "mad as a hatter" ;)


RE: I trust them as far as I can throw them.
By AmbroseAthan on 9/11/12, Rating: 0
RE: I trust them as far as I can throw them.
By fortiori on 9/11/2012 11:58:16 AM , Rating: 2
RE: I trust them as far as I can throw them.
By Samus on 9/11/2012 1:46:13 PM , Rating: 2
fortiori, you do realize the Fed is not an entity of the federal government right? as ironic as it sounds, they act independently of what this administration tries to get them to do. the way money is micromanaged in this country is ridiculous.


RE: I trust them as far as I can throw them.
By fortiori on 9/11/2012 1:50:29 PM , Rating: 3
I'm curious what your point is here. The idea that TARP made money is preposterous. They were paying it back with money the fed printed and gave them. Every dime the fed prints leaches capital from everyone participating in the money supply. No money was made by anyone, least of all the treasury.


RE: I trust them as far as I can throw them.
By Ringold on 9/11/2012 2:09:11 PM , Rating: 2
In a purely accounting sense, you're wrong.

In a wider, more prosaic sense, you might end up being right, but aren't yet. Inflation is coming, thats sure enough, but we'll have to wait and see how bad it is. If the economy remains stagnant, we can stick with low inflation for a long time, like Japan has.


RE: I trust them as far as I can throw them.
By geddarkstorm on 9/11/2012 4:56:10 PM , Rating: 2
You're right indeed, but the way it sounds it's like we've lit a match to a pile of thermite and now we're just waiting to see how hot it burns.

I wonder if we can get this economy growing fast enough to outpace the inflation that may hit. But if we're stagnant and inflation finally comes... we may suffer heavily for it. Maybe there's some other way to solve the problem before it arrives... but I for one am not looking forward to those days.


By Ringold on 9/11/2012 10:02:52 PM , Rating: 2
We agree there.. I'm not sure it'll even matter if the economy is doing well or not when inflation kicks up, modern civilization hasn't produced a precedent for this. Some countries do have high inflation, but developing economies growing rapidly, no country remotely similar to the US's level of development.

If nothing else, the US *must* balance its budget and move to a slight surplus, because we've got so much debt that if interest costs spike, we're instantly bankrupt.


By BansheeX on 9/11/2012 2:16:14 PM , Rating: 2
Levy a 10% tax increase to pay these bankers, and there's a revolt. Print/devalue money by 10% and loan it at absurd rates of interest that no one else can get and everyone thinks you've paid it off. Neat trick!


RE: I trust them as far as I can throw them.
By Jeffk464 on 9/11/2012 12:44:58 PM , Rating: 1
Unfortunately all of the money goes to executives and wallstreet, nothing goes to american workers.


RE: I trust them as far as I can throw them.
By Ringold on 9/11/2012 2:11:26 PM , Rating: 2
So Manhattan isn't sovereign US soil any more?

Gee, I guess we got upset over nothing 11 years ago!


By Jeffk464 on 9/11/2012 3:45:22 PM , Rating: 2
I'm just saying apple's success or failure doesn't effect the US job market much, so who cares.


Can anyone explain that math?
By Mint on 9/11/2012 12:17:16 PM , Rating: 5
Anyone know how "$12.8 billion at an annual rate" equates to 0.5% of a >$15T/yr GDP?

I'm always skeptical about these kinds of analyses, as there's always a substitutive effect. When you buy one thing, you tend not to buy another. Moreover, it's not like Apple is spending most of their fat 60%+ gross margin on middle class wages for new manufacturing or R&D. Almost all of it is going straight to their cash reserves. If a consumer spent the premium of an iPhone5+contract on, say, gardening services and dining out, a lot more of that would wind up helping other workers and the rest of the economy.




RE: Can anyone explain that math?
By Ringold on 9/11/2012 2:24:38 PM , Rating: 2
Agreed, asides from worship of the middle class. As long as our tax code is a mess and manufacturers and recruiting firms can't find qualified people, then we shouldn't wonder why investment takes place elsewhere.

Read surveys that get updated every so often again earlier this year, a large group of multinationals' CFO's based outside the US were asked what they'd do if the US converted to the FairTax. Virtually all said new plants built would be built in the US, and a large portion said they'd move their HQ to the US. We're not entitled to investment (other peoples money); investment goes where investments appreciated.


RE: Can anyone explain that math?
By geddarkstorm on 9/11/2012 4:45:23 PM , Rating: 2
So very true. Its these basics in economics that I wish our leaders showed more of a versing in. We need incentives to get people investing in this country again, if we want to grow our economy; since we don't have much of a raw manufacturing sector these days.


By Reclaimer77 on 9/11/2012 5:51:13 PM , Rating: 2
The only objective analysis of the past 4 years that one can conclude, is that the President and party that's been in power does not WANT economic growth and investment into this country.

Honestly there's no way you can look at the policies over the past 4 years, and conclude that those were the goals. How could they possibly be the goals when the policies put in place have the direct opposite effect?

So many people don't get it. These people DO understand the basics in economics. It's just that they don't care about them.


RE: Can anyone explain that math?
By Mint on 9/11/2012 8:14:56 PM , Rating: 3
That's a bunch of crap. Despite GOP attempts to convince you otherwise, 3M job openings is actually a low figure historically:
http://research.stlouisfed.org/fred2/series/JTSJOL...
Business are hiring slowly because there's no demand . If you can't find programming skills in a $10/hr worker, then I suppose you can call that a lack of qualified people, but you'd be disingenuous. Lots of businesses have the capacity to increase output with a few hires, but have no need.

The more income you have, the lower percentage of it you spend on goods/services, so cutting taxes for the rich won't do anything. The purpose of investment is to take advantage of future demand, so the rich are not investing much either, hence $10T+ in US bank deposits and $10T+ in public debt, all earning negative real interest. Get it? Wealthy entities are so adverse to spending/investing that they'd rather watch their wealth shrink than buy goods, build assets, etc.

As for the FairTax, there's nothing fair about it. Conservatives cherry pick federal income tax to point out how burdened the wealthy are, and ignore the regressive nature of payroll taxes, state/local taxes, property taxes, etc. States/cities compete with each to get the rich to move in and the poor to move out. Florida, for example, collected only 2.6% of the income from the top 1% but 13% of the bottom quintile's income.

The FairTax is a way to dupe the masses into letting the rich pay less tax. Currently, the top 1% pay <1% of their income in sales tax, while the bottom 20% pay 7% of their income:
http://www.scottgoold.org/images/issues/state.loca...
That already reduces demand, because the tax burden shifts to the biggest proportional spenders. On top of that, sales taxes discourage consumption, killing demand even more.

It would be catastrophic for the economy. But of course, this is DailyTech, so I expect to be rated down instead of argued logically.


RE: Can anyone explain that math?
By Ringold on 9/11/2012 10:37:52 PM , Rating: 1
I'm not sure what the GOP is pushing, as I turn on my TV perhaps once a month. I only know what data says, and what surveys and reports from businesses (from non-partisan sources) say.

Yes, 3M job openings is relatively low. I'm not sure what you're point is; I was pointing out certain ones are hard to fill, and you respond with an inexact chainsaw figure when you needed a surgical knife. You're right, demand is low, never said otherwise.

quote:
If you can't find programming skills in a $10/hr worker, then I suppose you can call that a lack of qualified people, but you'd be disingenuous.


You're disingenuous by suggesting thats reality. What's reality is a severe lack of specific sorts that employers want; I'm an economist, not a programmer, so I don't know wtf hadoop or ruby on rails is versus, say, C++, but I see the labor market for it, and its essentially "Name you're price, you're hired." Small caveat: May have to be open to relocating, the job may or may not be around the corner. Labor mobility has long been a strength of the US economy however.

quote:
Wealthy entities are so adverse to spending/investing that they'd rather watch their wealth shrink than buy goods, build assets, etc.


Would you invest in this country? I sure as hell wouldn't. Obama and the Democrats pander to the welfare class, and suggest "we," the investing class, are bad guys, cheats, liars and couldn't of done it without the government and all those nice roads that were built half a century ago. We've got a President that doesn't understand business and a Democrat-controlled Senate so interested in pandering and creating its socialist Utopia via micromanagement (I like that 10% excise tax on tanning salons in Obamacare) that it's happy to let a fiscal cliff get closer and closer. Which would be okay, if businesses had an idea of how it would get resolved, but they don't. Obama's got some proposals out there, but they do nothing to reign in the incredible deficit, so businessmen know it's a bullshit plan and is just window dressing before a real plan comes forward. The real plan, since Obama/Democrats aren't willing to put one forward, could be anything.

Then lets not forget the messy corporate tax code, the recently hyper-active EPA doing crap like try to expand the definition of navigable waters it can regulate to include everything down to a puddle, etc.

They can't even invest overseas, because the US is the only OECD nation to tax businesses on foreign profits, and plus they get attacked for "offshoring money," when they just thought it was called "investing in strong, developing markets," just like European companies once did here.

So, yes, they're insulted and nervous about the future, both in terms of taxes and regulation, so they're sitting on record cash reserves.

quote:
Florida, for example, collected only 2.6% of the income from the top 1% but 13% of the bottom quintile's income.


Couple reasons for that. For one, no state income tax at all. Secondly, AFAIK, millionaires have homes here but tend to do a lot of their spending elsewhere. That's what I've heard, but don't have hard data on it. Regardless, Florida can get more in property taxes from one mansion then it does a hundred average Joe's homes.

quote:
The FairTax is a way to dupe the masses into letting the rich pay less tax. Currently, the top 1% pay <1% of their income in sales tax, while the bottom 20% pay 7% of their income:


The FairTax, which I'm not sure you actually have read, would remove all tax burden from the poor. How is that unfair? All of it. Yes, they'd pay it at the cash register, but it sends a rebate equal to poverty-level spending to each household every month, effectively paying zero tax.

Further, it can help the poor more because, as I understand it, second-hand or used products aren't taxed.

The rich would also pay more taxes on a lot of things they currently pay artificially low rates on or zero taxes on when the old system stuffed full of decades of carve-outs is swept away. Therefore, citing existing sales-tax takes is totally useless. Either you haven't read the FairTax, don't understand it, or are intentionally trying to be misleading.

quote:
On top of that, sales taxes discourage consumption, killing demand even more.


Some prices may go up (some would go up a lot, some would actually go down, others would be unchanged), the net change would be fairly minimal depending on the FairTax rate selected to balance a budget, yes. But don't forget, all other income taxes are removed, and not just the income tax itself but all the hidden employer-side taxes. Incomes would, therefore, rise to offset the sales tax.

quote:
It would be catastrophic for the economy. But of course, this is DailyTech, so I expect to be rated down instead of argued logically.


Your willful ignorance is a cancer on your intellect, and you'd do well in your life to open your mind up. The FairTax has published research supporting it, including notable support from the NBER, even some Democrats that aren't so caught up in class warfare. It'd in no way be detrimental to the economy, except for income tax accountants and related lawyers. (Oh, pity the lawyers) Surveys of multinationals outside the US agree with US counterparts that it'd be a huge boon. Your only valid point is that it reduces the governments ability to create a Marxist redistribution environment, as the rate would be set for all, except potential tinkering with the poverty rate.

Interesting thing, though, is that I think it was Axelrod that let slip an admission that Obama knows the rich can't possibly afford to do much towards the deficit; in a second term, long-term deficit reduction means they have to tap the real pot of gold -- that fabled middle class. So don't pretend that if the average Joe ended up shelling out a few % more it'd be a bad thing, because your own ideological peers understand they have to anyway. Just a matter of how to collect it.


RE: Can anyone explain that math?
By Uncle on 9/11/2012 11:42:22 PM , Rating: 2
"so they're sitting on record cash reserves." Would that money be from the backing of the taxpayers guarantee for the Bailouts, Incentives, Tax right offs, tax breaks, subsidies, tax credits, deductions, exemptions from regulations, financial guarantees. The federal government alone shells out $125 billion a year in corporate welfare, and that doesn't include the billions state and municipal governments hand the corporations. All that money is from individual taxpayers such as yourself. So out of the trillions in federal debt to help pay for corporate welfare, and your Wars, what are you getting out of it.
How would you like to pay only a quarter of the real state taxes you owe on your home? And
buy everything for the next 10 years without
spending a single penny in sales tax? Keep a
chunk of your paycheck free of income taxes?
Have the city in which you live lend you money at
rates cheaper than any bank charges? Then have
the same city install free water and sewer lines
to your house, offer you a perpetual discount on
utility bills--and top it all off by landscaping your
front yard at no charge?
What was that, Corporate welfare bums that control the media haven't informed you.


RE: Can anyone explain that math?
By Ringold on 9/12/2012 5:30:07 AM , Rating: 2
Thats all empty propaganda. What 99% of trolls call "corporate welfare" is straight-forward things like capital depreciation, or R&D tax credits, various forms of expense deduction, etc. There's also the tax credit for things like providing health care plans, IE, the government paying penance for WW2 era wage controls that forced health care on the corporate world. All of which only goes part way to negating the fact our standard tax rates are among the highest in the developed world.

The real recipients of "corporate welfare" are farmers, typically, and whatever tech sector has political favor -- ethanol one day, solar the next.

Local incentives to attract business generally create hate on the internet solely among those that didn't want to treat them so well. If you wonder why jobs go overseas, it's because the same thing happens internationally. Money flows where money is treated best.

Even your number makes no sense. 125 billion a year has you pissed off? Wake up. The budget deficit this year the CBO just reported will be over ten times that amount.

Don't forget too that if we went your way, ended personal income taxes and shifted the burden to corporate America, well.. we have to assume they don't simply leave, which they would, immediately. But in your fairy tale where they stay, where do you think the average Joe gets his paycheck? Companies. What do you think is baked in to sale prices? Costs. Who do you think, then, pays all corporate taxes?

Thats right. You do.

Every econ 101 course, be it intro to Micro or intro to Macro, has the flow chart of money and services. What comes around, goes around, with the government in the middle of the chart, leeching blood off of everybody all the way around.


RE: Can anyone explain that math?
By Uncle on 9/12/2012 12:56:56 PM , Rating: 2
"like capital depreciation, or R&D tax credits, various forms of expense deduction, etc."Could I have some more of the "ETC".
Does the ETC include "Bailouts, Incentives, Tax right offs, tax breaks, subsidies, tax credits, deductions, exemptions from regulations, financial guarantees from the taxpayers.


RE: Can anyone explain that math?
By Mint on 9/13/2012 2:11:11 AM , Rating: 2
quote:
Thats all empty propaganda. What 99% of trolls call "corporate welfare" is straight-forward things like capital depreciation, or R&D tax credits, various forms of expense deduction, etc.
No it isn't. Those are expenses that get deducted from a company's taxable income.

Corporate welfare is what makes tax corporate receipts only 12% of pretax corporate profit (i.e. revenue minus all expenses).


RE: Can anyone explain that math?
By Mint on 9/12/2012 6:04:32 PM , Rating: 2
Apologies for the assumptions, but it seemed like you were implying that the labor force being too unskilled is the reason for unemployment. Demand is the biggest problem by far.

People invest where they can make money, and willingness of wealthy people/entities to accept long term negative real interest rates shows you that there's no obvious place to make money anywhere and they have no desire to consume much either (they never have). They're saving for the sake of saving, not because they'll be rewarded with more buying power later. People get wealthy by selling stuff to others, and that means investment opportunities will ONLY go up with greater purchasing power by the masses or gov't. Otherwise, there will be nothing new to produce. You can call it class warfare if you want, but it's nothing more than pointing out the truth.

This isn't a suddenly new problem, BTW. We simply had a way to ignore it in the 30+ years before this recession: No matter how much the wealthy wanted to save, banks were able to lend the money back out, sure that it was secured with housing value. If this was still the case, my argument would fall flat. However, despite the banks being right for decades, the market suddenly realized that our assets were tapped out. From now on, we'll never be able to lend that much again. FYI, in 2006 private debt increase (i.e. lending from savers to spenders/investors via banks) funded a full quarter of the economy.

If, collectively, entities with disposable income don't want to spend/lend/invest enough of it employ almost everyone that wants to work, then forceful redistribution is the only answer aside from simply accepting wasted human capital.


RE: Can anyone explain that math?
By Mint on 9/12/2012 7:25:00 PM , Rating: 2
Regarding the FairTax, even though I goofed in mentioning federal payroll deductions, all the other points stand. Only with a very progressive income tax is today's total tax burden relatively flat for the top 60% of earners:
http://www.ctj.org/pdf/taxday2011.pdf
Yes, the FairTax prebate will help the poorest, but the data still shows that the middle and fourth quintiles currently pay ~4% of their income in sales tax while the top 1% pay less than 1%. In other words, my argument remains the same.

You'll have to do a lot better than qualitative conjecture to discredit current sales tax data. The rich spend a lower percent of income on housing, too, so new taxation there is also regressive. No matter how you slice it, a giant chunk of the tax burden is shifted away from the rich and onto everyone else.

Of course net incomes will rise, but any revenue neutral sales tax replacement of income tax will marginally reward those who spend less than X% of their income and marginally punish those who spend more. You can't have everyone be a winner.

That means the FairTax will reduce demand. If we added a $5/gallon gas tax and "prebated" away the revenue increase, what do you think would happen to gas consumption?

As for the foreign tax argument, all gov'ts have some sort of repatriation tax because that's the only way to make companies pay anything. If you take away the tax on foreign profits, then a few middlemen would just put all profit on foreign branches with the US branch being break-even.

Your excuses for not investing are nonsense. The only thing a lower deficit will do make entities put their money in a bank at 0% instead of buying treasuries at 0.1%. The stock market goes up on news of stimulus possibilities despite the deficit increase because it helps demand. Regulations amount to a nuisance, and are barely any stronger now than 10 years ago.


withdrawn
By Ristogod on 9/11/2012 10:19:49 AM , Rating: 2
And this is why I don't have any money with jp morgan anymore.




RE: withdrawn
By Uncle on 9/11/2012 11:25:17 AM , Rating: 2
This is JP Morgans polite way of saying BUY BUY BUY apple shares."He expects that $200 of that amount would be import component costs with $400 per device" As SJ said "I get 100% profit" from the price of production. So that means $200 of the $400 goes into apples coffers, that would leave only $200 for the U.S. gross domestic product numbers."Feroli acknowledges that his predictions seem large and need to be treated with a bit of skepticism." this would be his disclaimer to knowingly putting out a BUY BUY BUY apple shares.


RE: withdrawn
By Jeffk464 on 9/11/2012 12:40:48 PM , Rating: 2
I'm always wrong on this stuff, but it seems to me apple maxed out its market share and can only go down from here.


GDP? More like GNP
By shmmy on 9/11/2012 4:58:30 PM , Rating: 2
So the iPhone5 is made in the USA?! GREAT!

GDP is DOMESTIC product so how will this impact our GDP when its made in China? ha... And I got a C+ in economics :P

Im not sure who it is that does not know the difference in this situation. Media or Firm?

http://en.wikipedia.org/wiki/Gross_domestic_produc...

"is the market value of all officially recognized final goods and services produced within a country in a given period."

http://en.wikipedia.org/wiki/Gross_national_produc...

"Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Unlike Gross Domestic Product (GDP), which defines production based on the geographical location of production, GNP allocates production based on ownership."




RE: GDP? More like GNP
By Omega215D on 9/11/2012 6:20:53 PM , Rating: 2
Unless of course they're counting Samsung's new plant in the US to help with iproduct production.

It seems Samsung is more American than Apple.


RE: GDP? More like GNP
By Jeffk464 on 9/11/2012 11:58:17 PM , Rating: 2
Like Toyota provides more american jobs than Ford.


What the headline should of said...
By petrosy on 9/11/2012 7:10:32 PM , Rating: 2
"iPhone5 puts more Americans further in debt!"




By shmmy on 9/11/2012 9:01:26 PM , Rating: 2
Thats what fox news is for


By dark matter on 9/11/2012 11:43:01 AM , Rating: 3
It could possibly increased GDP by 2%.

But then, where would GP Morgan get it's commission from....




It is possible
By Schadenfroh on 9/11/2012 3:03:46 PM , Rating: 2
Apple is basically a religious institution with followers willing to sacrifice pieces of themselves to remain part of the faithful (see those selling a kidney for latest Apple products).

If one considers the revenue generated by various other religious institutions through tithing, a 0.5% impact on GDP is not far fetched. What is nice about Apple, you can tax them!




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