MNI DATA ANALYSIS: US Q2 GDP Revised Up To +4.2%>

--Nonresidential Fixed, Inventories Rev Up; PCE Growth Rev Down To +3.8%

--Core PCE Price Index Unrevised At +2.0%; Y/Y Holds At +1.9%

By Kevin Kastner, Harrison Clarke, and Shikha Dave

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

4.2% annual rate from the 4.1% pace in the advance estimate, compared 

with expectations for a downward revision to 4.0%, data released 

Wednesday by the Bureau of Economic Analysis showed. 

     An upward revision to nonresidential fixed investment growth was 

the key factor, supplemented by a smaller decline in inventory growth and 

a narrower net export gap. Government spending was also revised up, 

offset by a smaller gain for PCE and a larger drop in residential fixed 

investment. 

--OVERALL GROWTH, FINAL SALES RISE

     Overall, the data suggest gains in the overall growth picture, and 

the mix of revisions resulted in a upward adjustment to final sales. 

Likewise, the price picture was slightly higher than the advance 

estimate, but not materially. 

     Nonresidential fixed investment was revised up to an 8.5% pace from 

the 7.3% gain in the advance estimate, with equipment and intellectual 

property growth revised higher and structures revised lower. 

     Inventory investment was revised up to a $26.9 billion decline for 

the quarter from a $27.9 billion decline in the advance estimate. The 

net export gap now stands at $843.7 billion, narrower than $849.9 

billion gap in the advance estimate. 

     Government spending was revised upward to a 2.3% gain, compared 

with a 2.1% rise in the advance estimate. 

     Providing some offset, consumption was revised down, as expected, 

to a still-strong 3.8% pace for the quarter from the 4.0% advance 

estimate. There was a downward revision to goods PCE, while service PCE 

was unrevised. 

     The personal savings rate was unrevised from the 6.8% level in the 

advance estimate. It was 7.2% in the previous quarter. 

     Residential fixed investment was revised down to a 1.6% decline 

from the 1.1% drop in the advance estimate. 

     As a result of the mix of revisions, real final sales of domestic 

product were revised up to a 5.3% gain from the 5.1% increase in the 

advance estimate. Real final sales to domestic purchasers was unrevised 

from the 3.9% rise in the advance estimate. 

     The first estimate of the alternative growth measure, real Gross 

Domestic Income, was up 1.8% after a 3.9% gain in the first quarter, 

showed deceleration as opposed to the sharp acceleration from the first 

quarter seen for overall GDP. The average of GDP and GDI was a 3.0% gain 

for the second quarter, down from 3.1% in the previous quarter. 

--PRICE MEASURES GENERALLY UNREVISED

     The key price measures were generally unrevised in the second 

estimate for the quarter. The chain price index was unrevised from the 

previously reported 3.0% rise, above the 2.0% gain in the first quarter. 

     The closely watched core PCE price index was unrevised from the 

2.0% gain in the advance estimate, down from 2.2% in the previous 

quarter. As a result, the year/year rate was unrevised at a 1.9% gain, 

still slightly ahead of the 1.7% rise in the first quarter. 

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

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