**MNI DATA IMPACT: US Q2 GDP +2.1%, Q1 Unrevised At +3.1%>

--Annual Revisions Back To 2014 Included In Data

By Kevin Kastner, Brooke Migdon and Alexandra Kelley

     WASHINGTON (MNI) - Second quarter GDP rose 2.1% in the advance 

estimate, a slower pace than the unrevised 3.1% gain in the first 

quarter despite an expected sharp acceleration in PCE growth, data 

released Friday by the Bureau of Economic Analysis showed. 

     The second quarter gain was well above than the 1.8% gain 

forecasted by an MNI survey of analysts and the Bloomberg consensus. 

     Annual revisions back to 2014 were included in the data and show 

no change to the overall 2018 GDP pace, but a significant downward 

revision to growth in the fourth quarter to 1.1% from the previously 

reported 2.2% gain.

     Here are some of the other key factors from the data released on 

Friday: 

     - The GDP price index rose 2.4%, above expectations, while the core 

PCE price index posted a 1.8% gain, up from the 1.1% increase in the 

previous quarter. However, the year/year rate for the core PCE measure 

slowed to 1.5% (slowest since Q3 2017) from 1.6% in the first quarter, 

marking three consecutive quarters of deceleration. 

     - Final sales to domestic purchasers rose 3.5% after a 1.8% gain in 

the first quarter. Final sales of domestic product increased 3.0% 

following a 2.6% gain in the previous quarter. 

     - PCE accelerated to a 4.3% rate from a 1.1% rise in the previous 

quarter, which analysts had expected based on the improvement in monthly 

PCE and retail sales compared with the previous quarter. 

     - However, the net export gap widened to -$978.7 billion after 

shrinking to -$944.0 billion in the previous quarter, while the pace of 

inventory growth slowed to $71.7 billion from $116.0 billion in the 

first quarter.  

     - At the same time, nonresidential fixed investment fell 0.6% in 

the second quarter after rising by 4.4% in the previous quarter. 

Residential fixed investment also fell 1.5% after a similar 1.0% drop in 

the first quarter. 

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

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