A part of this past weekend’s happenings was the well-awaited release of the iPhone 7 on Friday. Since the iPhone 7 and its new features were revealed on September 7th, the public has been eager to have one of their own. Like the arrivals of previous generations of the iPhone, people have ordered theirs ahead of time to be able to have it the first day it is released and many will wait in long lines outside the Apple store just to make the new gadget theirs. Even some of the color options of the new phone have temporarily sold out. There is a lot of excitement around the iPhone 7 for the sake of having it but hopefully, for economists, the iPhone 7 will affect the economy similarly to how the previous iPhone releases did.
The New York Times revealed that “Michael Feroli, chief U.S. economist for JPMorgan Chase & Co., told the New York Times Sunday that there’s evidence that iPhone sales add between one-quarter and one-third of a point to gross domestic product growth.”. Economists have found that the influx of consumer spending is very reliable in the quarter that the new iPhone generation is released. This is because consumers are spending a lot of money during that time then they would usually spend in a month, and there is high demand, it feels like everyone has an iPhone. Apple is the highest valued tech company and 60% of their revenue is from iPhone sales. The new iPhone also stimulates the sales of electronic stores and the phone carrier companies.
Fortune, CNBC and other sources have reported that the iPhone 7 sales are currently in line with the previous iPhone releases. The iPhone sales during the release weekend have increased from each new release. If the trend continues, the iPhone 7 sales during the release weekend should pass the sales of the iPhone 6s release weekend. If it does, it will impact the economy even more that the iPhone 6s release did.
Fortune previously said that, “Around the start of 2015, it was reported that Apple’s iPhone 6 sales were responsible for 10% of all U.S. economic growth…The claim featured a 1.9 to 2.5% growth rate for the U.S. economy between 2014 and the first quarter of 2015 ”. From information gathered about the past iPhone releases, it will be interesting to see how this iPhone release pans out and could affect the economy similarly or differently. It will take time to tell, especially after seeing the sales of the iPhone 7 during the holidays.
Another notion about the iPhone is that it represents America’s changing economy and decline of manufacturing because it is made by the largest tech company in the U.S. economy but it is manufactured outside the U.S. This video from the New York Times was very helpful for my understanding of this topic-
Although, the new iPhone stimulates consumer spending, the company overall could be affecting the economy in a negative way because of the loss of jobs due to the decline of manufacturing, a factor of the economy.