How The iPhone 5 Could Add Half A per cent To GDP

iphone 5 3d render

Photo: YouTube

A note from Michael Ferolli at JPMorgan (via WaPo’s Zachary A. Goldfarb) emphasises another extraordinary aspect of the iPhone story.By his calculation, it could add 0.5% to GDP.


Assuming the iPhone 5 costs about $600, and if you assume that there are about $200 worth of imported products that go into the phone, each iPhone, then each iPhone adds $400 to GDP (as imports come out of GDP).

Says Feroli:

If calculated using the so-called retail control method, sales of iPhone 5 could boost Q4 GDP by $3.2 billion, or $12.8 billion at an annual rate. This would boost annualized GDP growth in Q4 by 0.33%-point. If hedonically-adjusted constant quality prices of phones declined due to newer or better features — a reasonable conjecture — then the lift would be even greater, though past iPhone releases don’t bear a visible impact on the relevant CPI components. The third of a percentage point lift would limit the downside risk to our Q4 GDP growth projection, which remains 2.0%.

Even Ferolli says that feels high, but notes that the iPhone 4S seemed to add as much as 0.2% to GDP, and the iPhone 5 is expected to be significantly bigger.

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