By Josh Newell

WASHINGTON (MNI) – Despite some possible reshuffling of components,
U.S. Q1 GDP is expected to be unrevised in its final estimate Thursday,
while incoming data is pointing to a Q2 GDP report that will look very
similar to the first quarter.

“There are some big component revisions, and I’m looking for upward
revision to exports and construction, while expecting downward revisions
in inventory and consumption,” Michael Englund, Chief Economist at
Action Economics, told MNI in an interview Wednesday when asked about
the third GDP estimate for Q1.

He said that the “quarterly services survey could show a downward
hit in the services sector,” but he still expects the various sector
revisions to be a wash and for overall growth to be unrevised.

According to a survey of economists by MNI, the final revision to
Q1 GDP is expected to show 1.9% growth, unchanged from the second
estimate. The GDP price index, which rose 1.7% for the quarter, is also
expected to be unrevised.

The most recent GDP report showed that overall personal consumption
grew 2.7% in the first quarter, as durable goods consumption jumped
14.3%.

Kenneth Mayland, President of ClearView Economics, who is calling
for a slight upward revision to GDP growth, told MNI, “I got a sense
that it could be taken a bit higher due to higher revisions to retail
sales, but there’s not really anything new to look at though.”

When asked about Q2 GDP, Mayland replied, “Looks like Q2 is going
to be very much a repeat of Q1; it’s going to be a weak number.”

He pointed to a possible soft consumption number, citing weakening
auto sales as the main reason but did say we could see that “housing
will have another quarter of double digit growth.”

Mike Englund agreed, saying, “The second quarter is turning out to
be roughly a repeat of the first quarter; expect lower inventories, but
I am looking for the same consumption number and continued residential
construction growth.”

“Less weakness in government spending simply due to a reversion
toward the mean should balance out the lower inventories.”

The third estimate of Q1 GDP will be released Thursday at 8:30 a.m.
ET by the Department of Commerce, and the initial estimate of Q2 GDP
will be released July 27.

— Josh Newell is a Washington reporter for Need to Know News

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MAUDS$]