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Apple iPhone 5 to boost US economy

Apple’s new iPhone 5 could not only boost the technology giant’s bottom line but also the overall US economy, JP Morgan says.

Apple plans to release the iPhone 5 this week, and according to JP Morgan’s chief economist, Michael Feroli, sales of the new iPhone could add between a quarter and a half percentage point to fourth quarter annualised growth in the US.

In a note to clients on Monday, Feroli said: "Calculated using the so-called retail control method, sales of iPhone 5 could boost annualised GDP growth by $3.2bn, or $12.8bn at an annual rate." That 0.33 percentage-point boost, he added, "would limit the downside risk to our Q4 GDP growth protection, which remains 2 per cent."

JP Morgan's analysts expect Apple to sell around eight million iPhone 5s in the fourth quarter. They expect the sale price to be about $600.

With about $200 in discounted import component costs, the government can factor in $400 per phone into its measure of gross domestic product for the fourth quarter.

Feroli said the estimate of between a quarter to a half point of annualised GDP "seems fairly large, and for that reason should be treated skeptically". But, he added, "we think the recent evidence is consistent with this projection."

Feroli said that when the last iPhone was launched in October 2011, sales significantly outperformed expectations.

"Given the iPhone 5 launch is expected to be much larger, we think the estimate mentioned ... is reasonable," Feroli wrote.

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