In our minds, the price of gas has a huge impact. It’s hard to spend more than a day or two without seeing what it costs to fill your car at a nearby station, given the prominent indication of prices. And lately the price has been directed in one direction – down. Thanks almost entirely to drop about $ 30 on the price of a barrel of oil, much of the decline in just the past few weeks, gas prices are at multi-year low and many Americans have a little more to spend elsewhere.
A popular place to put that money has recently been on a new Apple iPhone, which went on sale just over a month since the price on the pump started their recent free fall. Because the economic effects are complex, none of them is an unqualified victory for the US economy. But overall, it is likely to help the country to finish 2014 with one of its strongest since the financial crisis of 2008 results.
How large can be a bit of phone?
Michael Feroli, chief economist of the US JPMorgan Chase said the New York Times smartphone Apple has a great importance. “The iPhone is having a measurable impact. This is a small gadget, but it costs a lot and it seems that everyone has one. By doing the multiplication, to be imported.” His estimate is that sales of the iPhone added 1 / 4 1/3 of a point of GDP.
Notably, similar Feroli had to say things again in 2012, when the iPhone 5 was new. At that time, he estimated that 8 million new phones were sold in the country in the fourth quarter with about $ 400 margin. In any case, reports earlier this cycle and the CEO of Apple, Tim Cook, suggest that demand is stronger than ever. Feroli reality is more cautious with his estimate of the contribution of GDP this time even though the profit margin Apple phone is almost the same and the iPhone’s popularity has not faded.
But a cautious tone on the overall impact sounds, too. People who buy iPhones may have less money to spend elsewhere. Last month, the Commerce Department reported electronics and appliance sales rose 3.4%, while apparel fell 1.2%. “People are buying iPhones, partly as a status symbol,” Feroli told the Times. “They are not buying as much clothing.”
But it will never be the oil?
The effect of substitution of one good for another makes it seem that lower oil prices are just a winner, then. For every penny that you pay at the pump, which is one more than you can put into buying something else. But oil and Apple have become opposites in a rather intriguing way that makes things less clear. When the iPhone maker was young and outselling Macs in the 1980s, was a largely domestic company. All its profits are made here and stayed here. Today, the majority of iPhones are sold abroad and the economic impact they sit there, so the prospect of Apple to sell 60 million phones this quarter has dizzying meteorologists on US GDP.
Of course, the country was also importing the majority of its oil at the time, too. When prices fell, the pain that was felt especially in the Middle East as oil revenues fell along with them. With imports down to 1/3 of oil supplies, lower prices now beat in our own backyard, through places like Texas, Oklahoma, and North Dakota. Although there is concern that even lower prices could reduce investment in US oil production and increasing imports of oil again, even $ 80 a barrel means that profits fall drillers US . This leads to a smaller number of new jobs created in an industry responsible for 2 million and, according to Daniel Yergin, energy analyst and author of The Quest: Energy, Security, and the Remaking of the Modern World.
As Yergin did not put a value of GDP in lower oil prices, Capital Economics Andrew Kenningham quartz speculated that oil below $ 90 a barrel for a full year could add 0.5% to GDP. That is more important than one quarter of iPhone impact, but requires low prices to persist for some time – an uncertain bet in an uncertain world.
Meanwhile, a global phenomenon (the iPhone) and a global product (oil) are both working their magic on the US economy, often together. These prices mean lower gas more than $ 10 billion a month in the hands of consumers rather than the oil companies. And 10 billion dollars can buy a lot of iPhones.