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Economists Survey Raises 2021 CPI Forecast To 4.9%

--Downward Adjustments To PCE, Inventories; Government Spending Rev Up
--Core PCE Price Index Revised Down To +1.3%; Y/Y Unrev At +1.4% 
--Initial Jobless Claims Rose 20,000 To 245,000 In Dec 16 Week
By Kevin Kastner, Sara Haire and Holly Stokes
     WASHINGTON (MNI) - Third quarter GDP growth was revised down to a 
3.2% annual rate from the 3.3% pace in the second estimate, compared 
to no revision expected, but not altering the picture of strong growth 
in most recent two quarters, data released Thursday by the Bureau of 
Economic Analysis showed. 
     Overall, the data suggest that economic growth remained solid, with 
gains over 3.0% in each of the last two quarters after the usual lull in 
the first quarter. GDP appears on track to improve in 2017 from the 1.8% 
rise in 2016, barring a very soft reading in the fourth quarter. 
     Third quarter Gross Domestic Income revised down sharply to a 2.0% 
gain from the 2.5% increase in the first estimate for the quarter. This 
puts the GDP/GDI average at a 2.6% gain for the third quarter, smaller 
than the 2.9% increase originally posted for the quarter. 
     Both GDI and the GDP/GDI average were below their pace in the 
second quarter, putting them at odds with the small acceleration that 
GDP saw from the second quarter. 
     Within consumption, which is now reported up 2.2% for the quarter 
compared with the 2.3% second estimate, there was a strong downward 
revision to services spending that offset an upward revision to goods 
     Inventory investment was revised down to a $38.5 billion gain for 
the quarter from $39.0 billion in the second estimate. The net export 
gap now stands at $597.5 billion, wider than $594.4 billion in the 
second estimate. 
     Government spending now stands up 0.7% in third estimate after 
rising 0.4% in the second estimate, with the upward adjustment found in 
the state and local category. 
     Residential fixed investment was revised up to 4.7% rate of 
decline from the 5.1% rate of decline in the second estimate. 
     Nonresidential fixed investment was unrevised at a 4.7% pace of 
growth, with downward adjustments to structures and intellectual 
property offset by a sharp upward adjustment to equipment. 
     As a result of the mix of revisions, real final sales were revised 
down slightly to a 2.4% gain from the 2.5% increase in the second 
     The key price measures were little altered. The chain price index 
was unrevised at a 2.1% gain, remaining well ahead of the 1.0% increase 
in the second quarter. 
     The closely watched core PCE price index was revised down slightly 
to a 1.3% pace from the 1.4% gain in the second estimate. However, the 
year/year rate for the measure was unrevised at 1.4%, down slightly from 
1.5% in the second quarter. 
     Also released on Thursday, initial jobless claims rose by 20,000 to 
245,000 in the December 16 employment survey week, only slightly higher 
than the 240,000 level in the November 18 employment survey week. 
     Because claims become volatile during the holidays, the four-week 
moving average is a better indicator. The moving average rose by 1,250 
to 236,000 in the December 16 week, and could rise further in next 
week's data as the 238,000 level in the November 25 week rolls out of 
the equation. 
     Continuing claims rose 43,000 to 1.932 million in the December 9 
week, partially recovering the declines seen in the previous two weeks.
     ** MNI Washington Bureau: Tel. (202)371-2121 **