Forget the Dow Jones Industrial Average, sub-prime market rates and US Treasury statistics. There is a new index of the strength of the American economy, and it is sending shivers down the spines of some financiers, especially in California, the home of Apple Inc.
The iPod index is showing signs of a significant downturn. The last quarter of 2007 was the first period that sales of the little machines came in at less than double-digit growth rates, and the outlook for the current quarter is “tepid”.
Why should it be a worry that fewer music lovers are splashing out on the ubiquitous gadgets? After all, it is not as though they are as essential to the world economy as oil or other basic commodities, and they are also not as important as, say, the motor or airline industries.
But the iPod index is crucial for two reasons. First, it tells us a lot about the psychology of American consumers. If you feel it would be unwise to splash out the $250 (Dh920) or so for a new model, it says a lot about the strength of consumer confidence.
And second, iPod has come to represent all that is best about designer-led, hi-tech consumer capitalism. It is as much a symbol of the vigour of modern US business as, for example, Coca-Cola or General Motors were last century.
The design geniuses in California must come up with something new, and pretty quick. The iPod index – otherwise known as Apple shares – lost $22bn (Dh80.74bn) last week.