**MNI 5 THINGS: US Q4 GDP Above-Expected +2.6%; Claims 225k>

--5 Things We Learned From Thursday's Data

By Kevin Kastner, Shikha Dave, and Harrison Clarke

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

initial fourth quarter GDP data and initial jobless claims data released 

Thursday by the Bureau of Economic Analysis: 

     - The initial fourth quarter GDP data suggest slower growth, with 

GDP up 2.6%, slightly above the Bloomberg consensus estimate of 2.3% and 

the 2.5% rise expected in an MNI survey, but below the 2.9% whisper 

number. The components mix shows positive growth in the major 

components, though at a slower pace for PCE and government spending. The 

core PCE price index ticked down slightly to +1.9% y/y vs +2.0% y/y in 

the third quarter. 2018 GDP growth was 2.9%, up from 2.2% in 2017. 

Analysts expect growth to slow to closer to 2.0% in 2019. 

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

a slowdown in PCE (+2.8%, +1.92pp contribution vs +2.37pp in Q3) and 

smaller contributions from inventories (+$97.1b, +0.13pp vs +2.33pp) and 

government spending (+0.4%, +0.07pp vs +0.44pp). These were offset by a 

larger contribution from nonresidential fixed investment (+6.2%, +0.82pp 

vs +0.35pp) and a smaller drag from net exports (-$13.5b, -0.22pp vs 

-1.99pp). 

     - The inflation data were generally soft. The chain price index 

rose 1.8% in the fourth quarter vs a 1.7% gain expected by an MNI survey 

of analysts, following a 1.8% gain in the previous quarter. The 

closely-watched core PCE price index accelerated modestly to a 1.7% gain 

in the fourth quarter after a 1.6% rise in the third quarter. The 

year/year rate decelerated slightly to +1.9% in the fourth quarter from 

+2.0% in the previous quarter. 

     - Real final sales of domestic product were up 2.5% in the fourth 

quarter when another solid rise in inventories was removed. This was 

well above the 1.0% gain in the third quarter. Final sales to domestic 

purchasers were up 2.6% after a 2.9% gain in the third quarter. 

     - Also released Thursday, initial jobless claims rose by 8,000 to 

225,000 in the February 23 week. However, the four-week moving average 

fell by 7,000 to 229,000 as the recent peak of 253,000 rolled out of the 

calculation. Continuing claims rose by 79,000 to 1.805 million in the 

February 16 survey week, up 91,000 from the January 12 survey week. The 

claims data suggest that while initial claims remain at low levels, the 

level of insured unemployed has risen. 

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

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