Could the New iPhone Save Our Economy?

Report says yes, if 8M are sold
By Matt Cantor,  Newser Staff
Posted Sep 11, 2012 11:48 AM CDT
Could the New iPhone Save Our Economy?
This April 5, 2012 photo shows the company logo at the Apple Store in London.   (AP Photo/dapd, Martin Oeser)

The iPhone 5 may be more than just the latest gadget: It could be the savior of the US economy. Sales of the device could increase fourth-quarter economic growth by half a percentage point, according to a JPMorgan report. If the phones sell for $600 each, with $200 worth of imported parts, that means $400 per phone goes to the GDP. Sell 8 million, and Apple's adding $3.2 billion to the economy. Then the government could add a "hedonic adjustment"—a little extra to account for improvements over the old iPhone.

The report's own writer acknowledges that "this estimate seems fairly large" and "should be treated skeptically." But if the numbers are right, it "could mean the difference between a disappointing economic expansion and a half-decent one," writes Brad Plumer at the Washington Post. The idea is tied to the "broken windows" economic theory that, in a depression, "destroying some capital" can help, notes Paul Krugman in the New York Times: The improvement would come from people ditching old phones. Might be nicer to boost "useful stuff like infrastructure employing labor and cash that would otherwise sit idle," he muses. Click for Krugman's full post, or Plumer's full column. (Read more iPhone stories.)

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