Apple Adds to Improved Consumer Confidence (Craig Douglass On Consumers)

Consumer spending is 70 percent of the U.S. economy. We’ve noted that impressive figure in previous columns, but it is worth repeating because it provides a real sense of inclusion for Arkansas consumers. What it should mean to each of us is our individual purchases help make up the overall economic vitality of our state and nation. We are players in the economic equation. Sometimes it just doesn’t feel like it.

There is one interesting — interesting to me, at least — way to look at the power of individual purchases. And you need look no further than Apple, the computer-tablet-music-smartphone Apple, not the one-a-day-to-keep-the-doctor-away variety.

A case in point is that Apple’s iPhone 5 could have a material effect on the United States gross domestic product, at least in the fourth quarter of the year, according to JP Morgan Chase. In fact, the projection is that iPhone sales could potentially add a minimum of one-quarter of 1 percent (0.25 percent) to the GDP. And in an economy that is projected to grow at an anemic 2 percent, that level of impact could be considered significant.

Let’s look at total retail spending for September. The U.S. Commerce Department recently reported that last month’s retail spending increased 1.1 percent. What drove that increase was a 4.5 percent uptick in consumer spending at electronics and appliance stores. With the sale of more than five million iPhone 5s in the first three days the smartphone was on the market, it wouldn’t be much of a leap to conclude that electronics sales increases were driven primarily by the latest iPhone. So retail spending was led by electronics, and electronics was led by Apple.

Consider a multiplier effect, as well. When new iPhones are sold, additional sales are created in accessories such as cases and chargers. New product delivery also drives the warehousing and distribution segment. And the potential costs of mobile phone data plans are enriched as use of the phones and their multiple applications increases.

There’s more. Apple is not shy about reporting its considerable impact on the economy relating to job creation. The Apple website boasts, “Throughout our history, Apple has created entirely new products — and entirely new industries — by focusing on innovation. As a result, we’ve created or supported more than 500,000 jobs for U.S. workers: from the engineer who helped invent the iPad to the delivery person who brings it to your door.”

That bit of self-promotion quantifies 304,000 current jobs ranging from engineering to manufacturing to transportation, and 210,000 “economy jobs” from the new Apple iOS operating system.

If consumers feel good about Apple, they may also transfer some of that positivity to greater confidence in the general U.S. economy. Could there be a correlation between iPhone 5 and the fact that the Conference Board recently reported consumer confidence improved to 70.3 in September from 61.30 in August? (The Conference Board Consumer Confidence Index is a barometer of the health of the U.S. economy from the perspective of the consumer.)

“Consumers are feeling better,” said Chris Christopher, senior economist at IHS Global Insight, pointing to the introduction in September of the new Apple device. The consumer is not only buying iPhones, he is “starting to spend more on other items,” Christopher said.

We certainly can’t leave the politics out of the equation. Consumer-voters feel it across the country: The economy remains the top issue in this year’s presidential election, and in state and local elections up and down the ballot. If consumers are more confident about the economy and the economy is producing more jobs, particularly in swing states, the outcome of the quadrennial presidential contest in Tuesday’s national election could be influenced.

Wednesday morning headline: “Apple at core of election results.” Far-fetched? Perhaps not. Just as today’s technology has all of us more connected, consumer attitudes and their resulting spending could be connected to more than sales. Those attitudes may very well help make the sale at the polls. n

(Craig Douglass is a Little Rock advertising agency owner and marketing communications and research consultant. Email him at