REPEAT: MNI DATA ANALYSIS: US 4Q GDP +2.6% Vs +3.0% Expected>

Repeats Story Initially Transmitted at 13:30 GMT Jan 26/08:30 EST Jan 26

--GDP Price Index +2.4% Vs +2.3% Expected, +2.1% In 3Q

--Core PCE Price Index +1.9% Vs +1.3% 3Q; +1.5% Y/Y Vs +1.4% Y/Y 3Q

--Durable Goods Orders +2.9% In December, Ex-Transport +0.6%

By Kevin Kastner, Sara Haire, and Holly Stokes

     WASHINGTON (MNI) - Fourth quarter GDP rose 2.6% in the advance 

estimate, slower than the 3.0% pace expected, with the slowdown pinned 

to more tepid inventory growth and a wider trade gap, offset by a surge 

in consumption growth, data released Friday by the Bureau of Economic 

Analysis showed. 

     With strong gains in the most recent three quarters, GDP was up 

2.3% for 2017 as a whole, compared with a 1.5% gain in 2016. On a fourth 

quarter over fourth quarter basis, GDP growth was up 2.5% after a 1.8% 

4Q/4Q gain in 2016.

--PRICE MEASURE ACCELERATE

     The core PCE price index rose 1.9% in the fourth quarter after a 

1.3% increase in the third quarter. On a year/year basis, fourth quarter 

core PCE prices were up 1.5% after dipping to a 1.4% year/year rise in 

the third quarter. Even with this slight rebound, the year/year pace was 

still below what was seen at the end of 2016.

     The overall GDP price index was up 2.4% in the fourth quarter 

after 2.1% pace of growth for the third quarter, about as expected as 

energy prices have crept up.

--PCE STRONG, INVENTORIES SOFT

     PCE was up 3.8% in the fourth quarter after a 2.2% rise in the 

third quarter, the strongest gain since the second quarter of 2016. The 

gain in fourth quarter PCE was led by sharp increases in both the 

durable and nondurable goods sectors and an acceleration in services 

spending. 

     Inventories were up $9.2 billion in the fourth quarter after a 

$38.5 billion jump in the third quarter, accounting for some of the 

fourth quarter GDP slowdown. When the inventory component is removed, 

real final sales rose 3.2% after a 2.4% gain in the third quarter. 

     The net export gap widened to $652.6 billion for the fourth quarter 

from $597.5 billion in the third quarter, also subtracting from the 

headline number. 

     Nonresidential fixed investment rose by 6.8% in the fourth quarter, 

up from a 4.7% gain in the third quarter, due in large part to a rebound 

in structures. 

     Residential fixed investment rose 11.6% in the fourth quarter, 

bouncing back from a 4.7% decline in the third quarter and a 7.3% drop 

in the second quarter. 

     Government spending rose 3.0% in the fourth quarter after a 0.7% 

rise in the third quarter. 

--DURABLE GOODS ORDERS SURGE

     Also released on Friday, durable goods orders surged by 2.9% in 

December, well ahead of expectations for a 0.9% gain due to a 7.4% jump 

in transportation orders. 

     Excluding transportation, orders were up 0.6%, about as expected, 

with gains in a number of components. This was the seventh gain in the 

last eight months for the nontransportation category, a sign of 

underlying strength. 

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