The iPhone 12 Meets the Recession

Apple Inc. (NASDAQ: AAPL) may release its new iPhone 12 as early as next week. The new smartphone will work on the super-fast 5G networks. Apple releases several versions of its new models. There will be a low end, affordable model similar to the current SE, and, at the top of the range, a model like the iPhone 11 Pro Max, which has a price as high as $1,449. It will be the first time Apple has introduced a new model into the teeth of a recession since it launched the iPhone 3G in mid-2008.

Some experts believe that the new iPhone will do well because it is part of what is known as a “supercycle.” The iPhone will undergo its first major upgrade in several years because of the demand for 5G, which will be available across most of the country within a year and is available in many cities today. Older iPhones that work on slow and antiquated 4G networks will become much less attractive.

No matter how attractive the new iPhone 12 is, there were still 13.6 million Americans out of jobs in August, according to the Bureau of Labor Statistics. That is over double the number of a year ago. People who work part time, particularly in the huge services industry, have found it harder to get even low-paid work. People who received additional unemployment checks under Supplemental Unemployment Benefits plans have lost them. And some people with jobs worry they will lose them if the spread of COVID-19 begins to lift again in the winter.

The launch of the new iPhone 12 will test the extent to which millions of people will stretch the money they do not readily have to buy a new product, no matter how attractive it is. Carriers like AT&T and Verizon will make the purchases more financially attractive. People can pay for their new iPhones by the month when they buy wireless subscriptions. Under these circumstances, the price of a new iPhone 12 can be part of a $30 or $40 a month package. This system for the purchase of smartphones could cushion the blow of a drop in demand because of the huge rise in unemployment since March.

The estimates for iPhone 12 sales this year, worldwide, range as high as 68 million, which means demand will be unprecedented. If the number holds, at least one consumer product will have overcome the drop in discretionary spending that is part of a recession.

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