US Q2 GDP revised lower to 3.8 pct rise, as key inflation index revised higher

US Q2 GDP revised lower to 3.8 pct rise, as key inflation index revised higher

	Published : Thu, 27 Sep 2007 13:51 By : Agencies Print this Story

WASHINGTON (Thomson Financial) - The US economy rebounded in the second quarter from the first few months of the year, though not quite at the pace officials had earlier thought, the Commerce Department said today.

The department estimated the economy grew at a 3.8 pct annualised rate between March and June, down from the 4.0 pct rate estimated a month ago.

Economists had been expecting a slight downward revision to a 3.9 pct annualised gain in the quarter. Still, the second quarter pace is more than six-times the pace of the prior three months, when the economy grew at an anaemic 0.6 pct pace.

The department said the downward revision to growth reflected an increase in imports of both goods and services, which subtract from GDP growth. Imports fell a revised 2.7 pct in the quarter, not as steep a decline as the 3.2 pct decline estimated earlier. Exports rose 7.5 pct in the second quarter.

Meanwhile, the Federal Reserve's preferred measure of inflation was revised slightly higher for the quarter. The core PCE price index, which excludes volatile food and energy prices, rose by 1.4 pct in the quarter, a tick higher than the 1.3 pct gain estimated a month ago. Still, that's sharply down from the 2.4 pct gain in the core PCE price index in the first quarter.

Over the past 12 months, the core PCE price index has risen an unrevised 2.0 pct, which is within the Fed's so-called 'comfort zone'.

The overall PCE price index rose 4.3 pct in the quarter, revised from the 4.2 pct gain in the earlier estimate. That's sharply higher than 3.5 pct pace in the first quarter and the fastest pace in a year.

Consumer spending, which accounts for as much as two-thirds of the economy, rose an unrevised 1.4 pct in the second quarter, slower than the 3.7 pct increase in the first three months of the year.

Spending on residential housing declined 11.8 pct in the second quarter, after plunging 16.3 pct in the first quarter.

Final sales rose a revised 3.6 pct in the in second quarter, slower than the 3.7 pct in the prior estimate, but faster than the 1.3 pct gain in the first quarter.

corbett.daly@thomson.com

cbd/wash/am

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