REPEAT:MNI DATA ANALYSIS: US Q2 GDP +4.1%; Q1 Rev Up To +2.2%>

Repeats Story Initially Transmitted at 12:30 GMT Jul 27

--GDP Price Index +3.0% Vs +2.1% Expected; Q1 Now +2.0%

--Core PCE Price Index +2.0% Vs +2.2% Q1; +1.9% Y/Y Vs +1.7% Y/Y Q1

By Kevin Kastner, Sara Haire and Shikha Dave

     WASHINGTON (MNI) - Second quarter GDP rose 4.1% in the advance 

estimate, lower than the 4.4% pace expected, and following an upward 

revision to first quarter growth to 2.2% from the 2.0% rate previously 

reported, data released Friday by the Bureau of Economic Analysis 

showed. 

     Comprehensive revisions were included with the data. The revisions 

resulted in very minor changes to annual rates over the last 10 years, 

but some larger adjustments to the individual quarter, particularly a 

large downward revision to fourth quarter 2017 growth to 2.5% from 2.9% 

previously reported.

--CORE PRICE MEASURE LOWER

     The core PCE price index rose 2.0% in the second quarter after a 

downward revised 2.2% increase in the first quarter. It was previously 

up 2.3% in the first quarter. On a year/year basis, second quarter core 

PCE prices were up 1.9% after a 1.7% year/year rise in the first 

quarter.

     The overall GDP price index was 3.0% in the second quarter, higher 

than the 2.1% rate expected, after a 2.0% pace of growth for the first 

quarter. 

--PCE UP, INVENTORIES DOWN

     PCE was up 4.0% in the second quarter after a 0.5% rise in the 

first quarter, with retail sales data early in the quarter pointing to a 

significant acceleration. The higher pace reflected a large rise in both 

goods and services PCE growth from the previous quarter.

     Inventories were down $27.9 billion in the second quarter after a 

$30.3 billion rise in the first quarter. When the inventory component is 

removed, real final sales of domestic product were up 5.1% after a 

1.9% gain in the first quarter. 

     The chained dollar net export gap narrowed to $849.9 billion for 

the second quarter after widening to $902.4 billion in the first 

quarter. Final sales to domestic purchases rose 3.9% after a 1.9% rise 

in the previous quarter. 

     Nonresidential fixed investment rose by 7.3% in the second quarter, 

slowing from the 11.5% rise in the first quarter, due mostly to 

equipment and intellectual property posting slower rates of growth. 

Residential fixed investment was down 1.1% in the second quarter after a 

3.4% decline in the first quarter. 

     Government spending rose 2.1% in the second quarter after a 1.5% 

rise in the first quarter. Federal government spending was up 3.5%, 

while state and local government spending rose 1.4%. 

--COMPREHENSIVE REVISIONS MINOR, 2017 NOW +2.2%

     The comprehensive revisions also released today show that GDP in 

2017 was adjusted downward very slightly to a 2.2% growth rate from the 

previously reported 2.3% gain. 

     However, the revisions showed faster growth than previously 

reported for the first quarter of 2017 (+1.8% vs +1.2% previous) at the 

start of the Trump administration, but slower growth in the other three 

quarters, including a sizable downward adjustment to the fourth quarter 

(+2.3% vs +2.9% previous). 

     In fact, looking at 2012 to 2017, the first quarter was revised up 

by 0.5 percentage point on average, compared with a more minor upward 

revision to the second quarter and downward revisions to the later two 

quarters. 

     The personal savings rate, which many were concerned about as it 

dipped lower through 2017, was apparently not as bad as it appeared. 

After receiving new information from the IRS that showed an 

under-reporting estimate of about $100 billion per year in proprietors' 

income over the past several years, the savings rate was revised up in 

every year since 2007. 

     Most notably, the savings rate was revised up to 6.7% in 2017 from 

3.4% previously reported. Since 2012, average annual growth in income 

was revised up by 0.4 percentage point, while average personal outlays 

were unrevised, so the upward adjustments to the savings rate were 

primarily an income story. 

     The core PCE price index was revised up very slightly to a 1.6% 

pace for 2017 from the previously reported 1.5% gain, with upward 

adjustments in every quarter of the year except for the first quarter. 

In general, overall price measures were little revised, but improved 

pricing measures for software and cell phones had the effect of lifting 

imports in some years. 

     The comprehensive revisions cover the several years of data, but 

looking at the most recent period of 2012 to 2017, GDP growth was 

unrevised at a 2.2% average annual rate. Likewise, the price index and 

GDI was also unrevised, at 1.5% and 2.0% respectively. 

     Revisions to individual years during that period were by no more 

0.1 percentage point. The 2008-2009 recession period shows a 2.7% annual 

rate of decline, compared with 2.8% previously reported. The expansion 

period since then still averages 2.2% annually. 

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