**MNI 5 THINGS: US Q2 GDP Below-Expected At +4.1%; Q1 Rev Up>

--5 Things We Learned From The Q2 GDP Data

By Kevin Kastner, Sara Haire, and Shikha Dave

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

advance second quarter GDP data released Friday by the Bureau of 

Economic Analysis:

     - The second quarter GDP data suggest stronger growth, with GDP at 

+4.1%, however below analysts' expectations for a 4.4% rise. This 

follows an upward revision to first quarter to +2.2% (previously +2.0%). 

The data included comprehensive revisions to the data. While the 

revisions were extremely minor overall, there were some notable 

alterations to the quarterly rates. 

     - The chain price index jumped to 3.0% in the second quarter, much 

higher than the 2.1% gain expected and following a 2.0% rise in the 

first quarter, a slight downward revision from the previously reported 

2.2% gain. The closely-watched core PCE price index slowed slightly to a 

2.0% rise in the second quarter after a 2.2% rise in the first quarter, 

however it still lifted the year/year rate to +1.9% in the second 

quarter from +1.7% in the previous quarter. 

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

primarily to an acceleration in PCE (+4.0%, +2.69pp contributions vs 

+0.36pp in Q1), as expected. There were also larger positive 

contributions from exports and government spending, which were slightly 

offset by a drag from inventories and smaller contributions from 

nonresidential fixed investment. 

     - Real final sales of domestic product were up 5.1% in the second 

quarter when the decline in inventories was removed. This was a much 

larger rise than the 1.9% gain in the first quarter. Final sales to 

domestic purchasers were up 3.9% after a 1.9% gain in the first quarter. 

     - The comprehensive revisions also released today show that GDP in 

2017 was adjusted downward very slightly to a 2.2% growth rate from the 

previously reported 2.3% gain, with similar sized revisions to previous 

years. The revisions did show faster growth than previously reported for 

the first quarter of 2017, but slower growth in the other three 

quarters, including a sizable downward adjustment to the fourth quarter 

(+2.3% vs +2.9% previous).  

     BONUS: The personal savings rate, which many were concerned about 

as it dipped lower through 2017, was revised up to 6.7% from 3.4% 

previously. New information from the IRS showed an under-reporting 

estimate of about $100 billion per year in proprietors' income over the 

past several years, allowing the savings rate was revised up in every 

year since 2007. However, average annual outlays growth over the period 

was unrevised, so the stronger savings rates were due to more income, 

not less spending. 

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

[TOPICS: MAUDS$,M$U$$$,MAUDR$]