Economists Expect Big Jump In 2Q GDP - We'll See


1. First Trust Predicts Strong 2Q Economic Rebound
2. There Are Reasons to be Optimistic, But Not 3.5% GDP
3. Atlanta Fed Forecasting 3.6% 2Q GDP, But Very Volatile
4. Will Fed Hike Interest Rates at June 14-15 Policy Meeting?
5. “Alpha Advantage” Strategy Already Up Double Digits in 2017


For reasons that are not yet clear to me, a growing number of economists and forecasters are predicting a big jump in the economy in the current April-June quarter. Some are expecting 2Q GDP to rise by 3.0-3.5%. I’m not sure why, but that’s what we’ll focus on today.

You will recall that the economy disappointed badly in the 1Q with anemic growth of only 0.7% (annual rate) according to the Commerce Department. I should point out that the Commerce Department has under-estimated GDP growth in the 1Q for a number of years now. Yet remember that for all of 2016, the economy grew by only 1.6%.

You may also recall that the US economy failed to grow by 3% in a single year during the eight years of President Obama. This hasn’t happened in decades. Yet forecasters are increasingly telling us that GDP growth will somehow surge to 3.0-3.5% in the current quarter. I don’t buy it.

Nonetheless, I will summarize the positive thinking regarding a big jump in the economy for you in the pages that follow, and then you can decide if you are buying into this newfound optimism, or if you remain skeptical as I am.

Don’t get me wrong, I sincerely hope that the US economy is about to leap ahead. I just don’t see it in the numbers so far. I’ll begin by summarizing the positive outlook of a widely-followed forecaster. Let’s get started.

First Trust Predicts Strong 2Q Economic Rebound

First Trust is a large, well-known investment banking conglomerate headquartered in the US. Like many large investment banks, First Trust puts out a weekly economic newsletter which is prepared by some very smart people.

Brian Wesbury, Chief Economist at First Trust, and his staff publish their “Monday Morning Outlook” each week, and they are among the crowd that believes the US economy is about to experience a big jump in the 2Q.

Before I summarize their latest analysis, let me qualify it by saying that Brian and his team are not wildly bullish on the US economy, but they do believe we are seeing a significant jump in GDP in the 2Q. Here’s their latest thinking.

For the last couple of years at least, Wesbury and his team have dubbed this slow recovery as the “Plow Horse Economy” – meaning slow but steady growth. While they admit that the weaker than expected 0.7% GDP growth in the 1Q was disappointing, they emphasize that GDP expanded by 1.9% for the 12 months ended March – very near the post-recession trend.

US Gross Domestic Product

They also point out that “core” GDP, which excludes inventories, government spending and trade with the rest of the world, grew at a 2.2% pace in the 1Q and is up 2.8% from a year ago.