The surprise decline in the March durable goods report weakened the already-anemic outlook for first quarter growth and dimmed the prospect for a big second quarter bounce.
Economists cut first quarter growth to just above 1 percent or lower, with Amherst Pierpont Securities now forecasting absolutely no growth at all. JPMorgan was quick to also pare back second quarter growth to 2.5 percent from 3 percent, on the view that some weakness in business activity will continue and that the dollar's impact on factory activity could offset an expected bounce back in consumer spending.
"We think about a full percentage point of growth in Q1 is related to bad weather," said Michael Gapen, chief U.S. economist at Barclays. "It's unlikely we get all of that back, but you should get some of it back." Gapen said first quarter is now tracking at 1.1 percent, down a 0.1, after the durable goods report. For now, he is leaving the second quarter at 3 percent.