The iPhone 5: Saviour of the US Economy?
Even before the new iPhone 5 had been unveiled, the countless rumours, predictions, criticisms and hype over its release rendered it one of the hottest topics in current affairs. Now that the phone as finally been released, economists are beginning to consider the fact that each consecutive iPhone has had astonishingly increasing numbers of sales, and are even beginning to speculate whether the iPhone 5 has the ability do the seemingly impossible and boost the US economy.
According to economist JP Morgan, sales of the iPhone 5 “could boost annualized GDP growth by $3.2bn, or $12.8bn at an annual rate.” But this statement led me to wonder, how is it possible? Why the sudden potential change in economic activity? The answer is simple; consumer behaviour. Recent studies show that, ironically, those who demonstrate the strongest demand for the new iPhone are those who currently own an iPhone. While some believe that it is the result of technological, life-improving innovations that have the potential to boost the US economy, economist Paul Krugman points out that it isn’t the technological advancements of the iPhone that will boost the GDP, but rather the spending that will occur when consumers abandon their phones and upgrade to the iPhone 5. However, he also begs the question, do we truly believe that destroying capital will benefit the economy in its state of depression? Skeptics are likewise quick to point out that if people buy iPhones with money they intended to spend somewhere else, there would be no boost in GDP.
The greatly anticipated phone has finally been unveiled and is set to be officially released tomorrow. So what is in store for the US economy? Perhaps we are over-hyping the release of the new gadget and the US economy will be relatively unaffected. Or, alternatively, perhaps the future of the US economy is in the hands of anxious, Apple consumers. Only time will tell!
Sources:
http://www.businessinsider.com/paul-krugman-on-the-iphone-5-2012-9
http://www.guardian.co.uk/business/2012/sep/11/apple-iphone-5-boost-us-economy?newsfeed=true
http://www.zdnet.com/why-the-iphone-5-launch-will-be-the-biggest-upgrade-in-consumer-electronics-history-7000004024/
http://www.phonewhiz.ca/ (photo)