by Calculated Risk on 6/08/2015 09:54:00 AM

Some excerpts from two research reports ...

From Merrill Lynch: To everything, there is a season

After a dismal start to the new year, we think that the worst is behind us. At its low, our tracking model for 1Q GDP pegged growth at -1.2%; now it is tracking -0.2%. The low for 2Q was 2.3%; now it is tracking 2.9%. On a similar note, key monthly data releases have shifted from negative to neutral. On a negative note, both core retail sales and manufacturing output were flat in April; on a positive note, the latest housing starts and auto sales data were strong and the labor market continues to motor along, with 200,000-plus job gains and a modest pick-up in wage growth.
emphasis added

From Goldman Sachs: After the Pothole

We view the recent turnaround in the US economic data as further confirmation that weak Q1 GDP growth was largely a result of temporary factors and statistical distortions with little bearing on the outlook for the rest of the year. Once again, the US economy seems to be climbing out of a Q1 pothole.
...
We continue to expect strong growth for the remainder of 2015. We are currently tracking Q2 GDP growth at 2.7% and expect a slight acceleration to 3% in 2015H2. We expect a pick-up in consumer spending to provide the largest contribution to stronger growth over the remainder of this year. Consumption grew a puzzlingly soft 1.8% in 2015Q1 despite strong disposable income growth and high consumer confidence. While many have expressed concern about softer spending in recent months, it is worth recalling that consumption has risen a respectable 2.7% over the last year ... We expect a rebound in coming quarters as the 1 percentage point (pp) increase in the saving rate seen over the last six months reverses.

Based on recent data, Q1 GDP will probably be revised up with the next release. And it looks like there will be a bounce back in Q2 (although the Atlanta Fed GDPNow model is only tracking 1.1% for Q2.