MNI DATA PREVIEW: 2Q US GDP Seen Revised Slightly Lower

By Alexandra Kelley

     WASHINGTON (MNI) - Second-quarter U.S. growth is set to be revised down to

2.0% in second-reading GDP data due Thursday, in line with the Fed's view but

down from the 2.1% initial estimate, as strong consumer spending balances

weakness in fixed investment and a wider trade deficit, according to MNI's

analysis and a survey of analysts.

     Personal consumption expenditures growth may be revised higher from the

advance estimate of 4.3% thanks to retail sales and services spending, but

business spending on intellectual property and equipment, hit by trade tensions,

could be cut. Nonresidential fixed investment and inventory accumulation may

also be weaker, and real exports, down 5.2% from the first quarter in the

advance estimate, could come in even lower this time.

     Here are other points to watch in Thursday's release:

     --STRONG PERSONAL CONSUMPTION. PCE growth is likely to be revised higher

from the advance estimate of 4.3%, buoyed by summer sales and last-minute

vacations. Retail sales has been strong, rising 0.3% in June.

     --FIXED INVESTMENT SOFT. Nonresidential fixed investment, a common proxy

for business investment, inventory accumulation and net exports, could be

revised down. Its monthly reading sank by 0.6% in June. Residential investment,

constrained by a lack of supply, is likely to be revised lower as well, after a

Q1 reading of -1.0%. Inventories may also soften, under the impact of trade

uncertainty, although this may be balanced by relatively strong consumer

spending.

     --TRADE. Net exports are likely to be nudged lower, amid trade tensions and

a slowing global economy. The first reading showed real exports slumping 5.25%

versus Q1, continuing a trend since the Q2 2018. Imports ticked slightly higher,

by 1%, in the first reading of 2019 Q2, detracting from total U.S. GDP.

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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