MNI DATA ANALYSIS: US 2Q GDP Rev Up To +3.0% vs +2.7% Expected>

--PCE, Fixed Investment, Inventories, Net Exports All Contributed 

--Key Price Measures All Unrevised From Advance Estimate

By Kevin Kastner

     WASHINGTON (MNI) - Second quarter GDP growth was revised up to a 

3.0% annual rate from the 2.6% pace in the advance estimate, data 

released Wednesday by the Bureau of Economic Analysis showed. 

     The larger-than-expected upward adjustment to 2Q growth was due 

to stronger PCE and fixed investment growth than previously reported. 

There was also an upward revision to inventory growth, now a small 

positive, and a smaller net export gap. The only negative was a downward 

adjustment to government spending, particularly state and local 

spending.

     Within consumption, there were upward revisions to both goods and 

services, while the upward revision to fixed investment was the result 

of both stronger nonresidential fixed investment growth and a smaller, 

though still large, decline in residential fixed investment growth.

     As a result of the mix of revisions, real final sales were revised 

up to a 3.0% gain from the 2.6% increase in the advance estimate. 

     The first estimate of second quarter Gross Domestic Income was a 

2.9% gain, up from 2.7% in the first quarter. This puts the GDP/GDI 

average at a 3.0% gain for the second quarter, stronger than the 2.0% 

increase seen in the first quarter. 

     The key price measures were generally unrevised in the second 

estimate for the quarter. The chain price index is still up 1.0% in the 

second quarter, as expected, remaining below the 2.0% gain seen in the 

first quarter. 

     The closely watched core PCE price index was unrevised from 0.9% 

rate posted in the advance estimate. As a result, the 

year/year rate for the measure remained at 1.5%, still below the 1.8% 

rate seen in the first quarter. 

     Overall, the data suggest a stronger rebound from the first 

quarter's slowdown than previously reported, led by PCE, with price 

gains still contained. Looking ahead, strong retail sales figures in 

July suggest PCE had a solid start to the third quarter. 

     ** MNI Washington Bureau: Tel. (202)371-2121 ** 

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