Apple’s iPhone 6 and 6 Plus may have set a new first-weekend sales record and drawn gadget geeks (and resellers) to line up across the country and around the world, but they won’t do much for U.S. GDP.
You probably could have guessed that just by looking at all those people wasting away hours of potentially productive time waiting to buy a phone, or playing with the devices once they have them, but Paul Dales, an economist at Capital Economics, provided clients with a more detailed explanation of just why Apple’s big things won’t do big things for the economy.
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In a note to clients Wednesday morning, Dales noted that previous iPhone releases have sometimes moved the needle on consumption of telephone and fax equipment, a category of consumer activity tracked by the Bureau of Economic Activity. “There was a clear boost after the release of the iPhone 4s, but no obvious boost following the release of the iPhone 5,” he writes.
The iPhone 6 launch appears to be Apple’s biggest yet, so it might drive up spending in that telephony category. A month-over-month increase of 4 percent in the telephone and fax category would lift consumption by about $1 billion. Still, that’s not a sizable enough increase in consumer spending to have a meaningful impact on gross domestic product. It’s equivalent to less than 0.01 percent of GDP, Dales notes.
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What’s more, consumer demand for the phones comes with a couple of downsides as it relates to GDP calculations. First, previous iPhone-driven increases in consumer spending have been accompanied by dips in such activity before or after the Apple release date.
“This implies that those who purchase iPhones tend to forgo the purchase of other items — either by postponing spending in advance or by cutting back afterwards,” Dales writes. “In other words, the release of a new iPhone model appears to have some effect on the timing of consumption, but not on the overall level.”
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Also, because the phones are assembled in Taiwan, the GDP accounting considers them imports. “This means that any boost to GDP from a rise in consumption will be offset by a corresponding
drag from an increase in imports,” Dales explains. The retail price of the phones may be greater than their import value, and phone buyers may then spend more on their wireless service contracts, but the overall increase to GDP is still “negligible.”
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