**MNI 5 THINGS: US Q2 GDP Revised Up To +4.2%; +4.0% Expected>

--5 Things We Learned From The Second Estimate of Q2 GDP

By Kevin Kastner, Harrison Clarke, and Shikha Dave

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

estimate of second quarter GDP data released Wednesday by the Bureau of 

Economic Analysis: 

     - Second quarter GDP was revised up slightly to +4.2% SAAR from 

+4.1% in the advance estimate, in contrast to the downward revision to 

+4.0% expected, but the price measures were generally unrevised, so 

there should be little reaction from analysts and the markets. The 

alternative measure of real Gross Domestic Income was +1.8% after +3.9% 

in the first quarter, putting the average of the two measures at +3.0%, 

down only slightly from +3.1% in the previous quarter, but with a clear 

divergence between GDP and GDI so far in 2018. 

     - The slight upward adjustment to headline GDP reflected upward 

revisions to nonresidential fixed investment and inventories and a 

narrower net export gap. These were offset by downward adjustments to 

PCE, residential fixed investment, and government spending. 

     - Nonresidential fixed investment was revised up to +8.5% from 

+7.3% in the advance estimate, with a sharp upward adjustment on 

intellectual property products (+11.0% vs +8.2%) the key factor. 

However, PCE growth was revised down to +3.8% from +4.0%, reflecting a 

downward adjustment to goods spending and no adjustment to services 

spending. The savings rate was unrevised at 6.8%, still down from 7.2% 

in the previous quarter. 

     - The prices measures were generally unrevised, with the GDP price 

index still at +3.0%, while the closely watched core PCE was also 

unrevised at +2.0%, holding the y/y rate at +1.9%, still ahead of +1.7% 

in Q1. 

     - Real final sales of domestic product were revised up to +5.3% vs 

+5.1% in advance estimate, reflecting an improved picture even when the 

small upward adjustment to inventories is excluded. Final sales to 

domestic purchasers were revised unrevised at +3.9%, up sharply from 

+1.9% in the first quarter. 

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

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