Will Apple (AAPL) iPhone Sales Cause A New Recession?
Apple (AAPL) sold more than one million of its new iPhones over the weekend. The costs of those handsets could have been $300 million, and that does not include the two-year calling plan from AT&T (T). Together, the handset and…
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The success of the new phone is either a sign that customers have the cash to help push up consumer spending, or they are willing to return to their leveraged habits, habits that helped bring on and then exacerbate the recession. It may take months to know which of the two possible paths the economy is taking.
The sales of the iPhone are certainly a sign that the consumer has become intrepid. He has been unwilling to part with money for several quarters now. An especially well-made, well-branded, and well-marketed product has changed that. Buyers could have resisted those enticements, but they did not.
It is too bad that the no one knows where customers got the money to buy their iPhones and whether they will be able to pay that debt and the cost of the AT&T subscription plan. The money may have been borrowed. It is borrowing the consumer may not have been able to afford. AT&T subscriber default rates over the next few months will be worth watching. iPhone purchasers may have overextended themselves.
The other and more optimistic case is that consumers have saved money long enough and kept household expenses down so that they can afford a new modestly priced consumer electronics device. But, that sounds un-American. No one pay cash anymore if they can use leverage. The recession has probably not taught people a thing.
Douglas A. McIntyre
Contact [email protected] for any questions or corrections.
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
