REPEAT: MNI DATA ANALYSIS: US 4Q GDP Revised Up To +2.9%>

Repeats Story Initially Transmitted at 13:30 GMT Mar 28

--Upward Adjustments To PCE, Inventories Were Key Factors

--Core PCE Price Index Unrevised At +1.9%; Y/Y Still +1.5%

By Kevin Kastner, Sara Haire and Holly Stokes

     WASHINGTON (MNI) - Fourth quarter GDP growth was revised higher to 

a 2.9% annual rate from the 2.5% pace in the second estimate, a larger 

upward revision than expected, data released Wednesday by the Bureau of 

Economic Analysis showed. 

     Upward revisions to PCE and inventories growth were the key 

factors, supplemented by smaller upward revisions to nonresidential 

fixed investment growth and government spending growth. There was some 

offset by a downward revision to residential fixed investment and a 

marginally wider net export gap. 

     The price measures were generally unrevised, so the market reaction 

to the upward revision to fourth quarter growth is likely to be muted. 

Analysts have turned their attention to the first quarter, when growth 

is expected to follow its usual seasonal pattern of slowing, followed by 

a rebound in the second quarter. Stronger PCE growth in the fourth 

quarter than previously estimated may give a jump start to first quarter 

consumption, so there is an upside risk. 

--PICTURE REMAINS THE SAME 

     Even with the larger-than-expected upward revision to headline GDP, 

the data suggest little change in the overall growth picture, with the 

mix resulting a small upward adjustment to final sales. 

     Gross domestic income, an alternative measure of growth, actually 

rose only 0.9% in fourth quarter after a 2.4% gain in third quarter. As 

a result, the GDI/GDP average slipped to a 1.9% pace after a 2.8% gain 

in the previous quarter. 

     Inventory investment was revised up to an $15.6 gain for the 

quarter from $8.0 billion in the second estimate. The net export gap now 

stands at $653.9 billion, modestly wider than $652.2 billion gap in the 

second estimate. 

     Within consumption, which was revised up to a 4.0% increase from 

3.8% in the second estimate, there were upward revisions to nondurables 

and services spending, partially offset by a downward adjustment to 

durables spending. 

     The personal savings rate was revised down to 2.6% from 2.7% in the 

second estimate, down sharply from 3.4% in 3Q. 

     Nonresidential fixed investment was revised higher to a 6.8% pace 

from the 6.6% gain in the second estimate, with a sharp upward 

adjustment to structures investment more than offsetting a downward 

revisions to spending on equipment and intellectual property. 

     Residential fixed investment was revised down modestly to a 

still-strong 12.8% rate from the 13.0% gain reported in the second 

estimate. 

     Government spending was revised up slightly to a 3.0% gain, 

compared with a 2.9% rise in the second estimate. 

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

product were revised up to a 3.4% gain from the 3.3% increase in the 

second estimate. Real final sales to domestic purchasers was revised up 

to a 4.5% pace from 4.3% in the second estimate. 

--PRICE MEASURES ROUGHLY UNREVISED

     The key price measures were generally unrevised in the third 

estimate for the quarter. The chain price index was unrevised at a 2.3% 

gain, the gross domestic purchases price index was unrevised at 2.5%, 

both up from the previous quarter. 

     The closely watched core PCE price index was unrevised at a 1.9% 

gain, up from 1.3% in the third quarter. The year/year rate for the 

measure remained at 1.5%, still slightly ahead of the 1.4% rise in the 

third quarter. 

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