Daily Data Flow: New iPhone Could Boost U.S. GDP; Watch for Higher Long-Term Yields

Daily Data Flow

New iPhone could boost U.S. GDP by up to 0.5 percent, JP Morgan says (Reuters)
Sales of the new iPhone could add between a quarter and a half percentage point to fourth quarter annualized growth in the United States, according to J.P. Morgan’s chief economist. Using the so-called retail control method, sales of iPhone 5 could boost annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate, he wrote. J.P. Morgan’s analysts expect Apple to sell around 8 million iPhone 5s in the fourth quarter. They expect the sales price to be about $600. With about $200 in discounted import component costs, the government can factor $400 per phone into its measure of gross domestic product for the fourth quarter.

Bill Gross Sees Higher Long-Term Yields Amid Reflation (Bloomberg)
Long-term bond yields will be higher than short-term rates in the United States and Europe because of “reflation,” according to Pimco’s Bill Gross. So-called yield curves are steepening in the United States and Germany. The gap between 10-year and 30-year U.S. rates widened to as much as 1.18% on Monday, the most since May. Investors should “continue to expect an attempted inflationary solution in almost all developed economies over the next few years and even decades,” Gross wrote in his monthly investment outlook on Pimco’s website.

World Economic Forum: China growth on track, says Wen Jiabao (BBC)
China’s Premier, Wen Jiabao, has told the World Economic Forum in Tianjin, China, that his country is on track to hit its growth targets for the year. The government had set a growth target of 7.5% for 2012. Two of the biggest drivers of China’s economic growth in the past few years have been the success of its export sector and an investment boom in the country. However, both these sectors have slowed recently.

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Over-optimistic Fed May backtrack again on Forecasts (Reuters)
Has the Federal Reserve watched the U.S. recession and painfully slow recovery through rose-colored glasses? A look at the U.S. central bank’s economic forecasts over the past five years suggest it has. Since October 2007, when the Fed’s policy committee began giving quarterly predictions for GDP growth and the jobless rate, the central bank has downgraded its nearer-term forecasts almost two-and-a-half times as often as it upgraded them. This week, most economics expect the Fed will take steps to decisively ease policy again with a third round of bond purchases to give the recovery another kick start. It will also offer a fresh batch of forecasts for growth, unemployment and inflation.

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