Weak first-quarter GDP expected, could lead to second-quarter bounce

Just like last year, economic growth in the first quarter looks stagnant, but many economists expect a bounce back in the second quarter.

First-quarter gross domestic product is scheduled to be reported at 8:30 a.m. ET Friday, and economists surveyed in the CNBC/Moody's Analytics Rapid Update see growth tracking at just 0.8 percent. The first quarter grew at that same sluggish pace last year.

"It's going to be weak. It's the residual seasonality. They just can't get the first quarter right. It's the wacky weather, delayed tax returns and residual seasonality," said Diane Swonk, CEO of DS Economics. Swonk said the government has had difficulty crunching the first quarter for two decades and underestimates activity, though it is trying to correct the problem.

But still there was some weather impact with unseasonably warm weather in January and February followed by late winter snow and storms in March. The consumer too has shown up as weaker, with softer retail sales and fewer-than-expected vehicle sales in March.

She said while the consumer may have slowed, it is not as bad as the data might reflect. J.C. Penney for instance, is temporarily delaying some store closings because of better-than-expected sales, she said. Going into the second quarter, the consumer looks to be picking up, and that should help the economy.

"It looks like the second quarter [growth] is over 3 percent, so if you have the two quarters, you get 2 percent growth," Swonk said.

In the bond market, there was some nervousness ahead of the report, as economists downgraded GDP forecasts after Thursday's data. The 10-year yield slid beneath the key 2.30 percent level and was at 2.29 in late afternoon.

"It's an open question how disappointing GDP will be and if it's priced in," said Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets. He also said the market was wary about Congress and its possible delay on the continuing resolution to keep the government funded.

The closely watched Atlanta Fed GDPNow forecast puts first-quarter growth at just 0.2 percent because of revisions to retail sales data and a decline in inventory investment. JPMorgan has a 0.3 percent forecast, but some other economists expect more.

Deutsche Bank's chief U.S. economist, Joseph LaVorgna, expects first-quarter growth of 1 percent. He said consumer spending should be off.

"That may be the payback of three quarters where the [consumer spending] average growth was 3.6 percent," he said. "I think weather was a problem as well." LaVorgna said the late Easter may have been a factor. He expects growth to pick up to 2.5 percent in the second quarter.

Economists mostly expect second-quarter growth to pick up. Macroeconomic Advisers raised their forecast for the second quarter to 3.7 percent, based on the anticipated impact of inventories investment.