by Calculated Risk on 5/10/2007 03:14:00 PM

From Nouriel Roubini: US Q1 growth likely to be revised to 0.7%: we are already in a “growth recession” range. And Q2 started even worse than Q1.

The revisions of Q1 GDP growth that will push the revised estimate of Q1 growth rate below 1% are:

Lower change in inventories than initially estimated reducing Q1 growth

Better construction spending than initially estimated increasing Q1 growth

Much worse trade balance in March than initially estimated reducing Q1 growth

The net effect of these three factors is an estimated 0.7% growth for Q1 (JP Morgan today revised its Q1 estimate downward to 0.8%).

Much more seriously, Q2 started on a very weak note for private consumption based on initial estimates of retail sales. I now expect Q2 growth to be closer to 0% or even negative (i.e an outright recession).

Meanwhile, the WSJ reports: Economists See Signs of a Rebound in Growth

The worst of the economic slowdown has passed, private economists said in the latest WSJ.com forecasting survey. But they don't see any reason to expect a significant acceleration.

By a more than 5-to-1 margin, the economists said they believe the first quarter's 1.3% growth -- the weakest in four years -- marked the low point in the slowdown that gripped the economy much of last year.

The average of these economists' forecasts is 2.2% (compared to 2.5% for Q1 in the February survey!).