2Q15 GDP Forecast: A Whopping 0.8 Percent -- 8 Times Better Than The 0.1% In 1Q15

Updates

Later, 11:08 p.m. CT: this headline from CNBC if the story below was not clear enough. The headline: "disappointing April retail sales spell bad news for 2Q15 GDP."

April retail sales come in unchanged, below expectations of a 0.2 percent gain.

Remember, this is not a first quarter number. This is second quarter, and retail sales are a significant component of GDP. Look for downward revisions for second quarter GDP. [GDPNow -- a Federal Reserve forecast -- already suggests how bad the 2Q15 GDP may come in -- see original post.]


Retail Sales are now flat or down four of the last five months.

• April: flat
• March: up 1.1 percent
• February: down 0.6 percent
• January: down 0.8 percent
• December: down 0.9 percent

The pull of Easter spending into March was likely an issue, but what happened to the lower gasoline prices that were supposed to save consumers money?

Later, 11:31 a.m. CT: in the original post below I noted the 1Q15 GDP was 0.1%. In fact, it was revised upward to 0.2% a month later. However, there are now indications that when the final revision comes out this month/next month, we will find that the US economy actually contracted in 1Q15. Definition of a recession: two consecutive quarters of negative growth.
 

Original Post

GDPNow forecast:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.8 percent on May 5, unchanged from May 1. The nowcast for the second-quarter change in net exports in 2009 dollars declined from -$14 billion to -$24 billion following this morning's international trade report from the U.S. Census Bureau.

The talking heads and the pundits will forecast a 2Q15 GDP of 2.5 to 4.25%. The federal reserve is forecasting ... drum roll ... 0.8%.

Meanwhile, in Europe, The Wall Street Journal is reporting:

For the first time since 2010, all four of the eurozone's largest economies (Germany, France, Italy and Spain) recorded growth.

And for the first time since Q1 of 2011, the currency area grew more rapidly than both the U.S. and U.K. The eurozone economy expanded by 0.4% at the start of the year, marking a pickup from the 0.3% growth recorded in the final quarter of 2014. (Comment: is that even statistically relevant?)

Although Germany's economy slowed more than forecast in Q1 (due to sluggish foreign trade and domestic demand), France marched higher. German GDP rose 0.3% at the start of the year, missing forecasts for 0.5% growth, while France expanded at its fastest pace in nearly two years (+0.6%) due to higher consumer spending.

Germany is still on track to outperform the euro area over the next two years as other countries lag behind on the reforms needed to sustain the recovery.

The only good news about these numbers? The numbers did not fall below zero percent.