**MNI 5 Things: US 1Q GDP Above-Expected +2.3%; ECI +0.8%>

--5 Things We Learned From The 1Q GDP and ECI Data

By Kevin Kastner and Sara Haire

     WASHINGTON (MNI) - The following are the key points from the 

advance first quarter GDP data released Friday by the Bureau of 

Economic Analysis:

     - The 1Q GDP and ECI data suggest milder growth, but more upbeat 

inflation, to start 2018. GDP growth, at +2.3%, was above analyst 

expectations for +2.0%, but well below the whisper number of +2.9%, so 

the market reaction to that data may be mixed. The GDP price index was 

softer than expected, but core PCE price measure accelerated. 

     - The chain price index rose 2.0%, below the 2.4% gain expected. 

However, the closely-watched core PCE price index rose 2.5%, the 

strongest pace since the second quarter of 2011 after a 1.9% gain in the 

fourth quarter, pushing the year/year rate up to +1.7% from +1.5% in the 

previous quarter, only marginally below the rates seen at the end of 

2016. 

     - The softer GDP pace, compared to the previous quarter, was due 

primarily to a slowdown in PCE (+1.1%, +0.73pp contributions vs +2.75pp 

in 4Q), as expected. There were also slower growth rates for 

nonresidential fixed investment, residential fixed investment, and 

government spending. These were offset by stronger inventory growth and 

a narrower net export gap. 

     - The ECI report released at the same time showed a 0.8% quarterly 

increase, stronger than the 0.7% rise expected, which translated to a 

2.7% year/year rate, up from 2.6% year/year in the previous quarter, but 

much higher than the 2.4% year/year rate in the first quarter of 2017. 

The headline gain reflected a 1.0% rise in private industry 

compensation, twice the rate of the fourth quarter. State and local 

compensation growth slowed to 0.4% from 0.7%. 

     - Wages and salaries rose 0.9% in the first quarter, while benefits 

costs were up 0.7%, both stronger rates of growth than in the previous 

quarter. The year/year rates for both of those measures ticked up from 

the fourth quarter. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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