Why latest GDP data provide few clues on Fed

Final first-quarter GDP dips 0.2 percent

The smaller contraction in the final revision of first-quarter gross domestic product does not bode all that well for the economy going forward, two economists said Wednesday, moments after the government's latest GDP data were released.

The latest clues on the economy come as Wall Street debates whether the Federal Reserve will hike interest rates for the first time in nine years at its September or December meeting—or possibly increase rates at both meetings.

"As we look out to the second quarter, this doesn't suggest any additional momentum," Sterne Agee CRT's chief economist, Lindsey Piegza, told CNBC's "Squawk Box" in an interview. "We're still looking for the second-quarter [growth] to come in under 2 percent."

This may give the Fed pause, she added.

Economist David Blitzer, chairman of the index committee at S&P Dow Jones Indices, was slightly more optimistic—predicting more than 2 percent growth in the second quarter but tempering expectations for how quickly the economy can expand.

"Potential growth for the U.S. economy is at best maybe 2.5 percent, maybe a little below that at this point," he told CNBC. "The ceiling is much closer than people think."

Blitzer said the level for an OK growth rate is no longer going to be 3 to 3.5 percent. "Those numbers are not going to be around this year."

He sees only one Fed rate hike this year.

In its third and final revision of first-quarter GDP, the government Wednesday morning said the economy contracted by an annual rate of 0.2 percent, matching forecasts, compared with the previous estimate of a 0.7 percent decline.

Despite the mild improvement in the headline number, Sterne Agee CRT's Piegza said, "We still see a pullback in the consumer from ... [strong] levels at the end of last year ... [with] business investment still very negative."

S&P's Blitzer also pointed to business investment as "consistently the disappointment that really matters."

"Companies seem to have piles of cash [and] all they do is buy back their stock," he said. "I think they're mostly buying back shares they've issued to pay employee options. And that's about it."

Ahead of Wednesday's data, the CNBC Rapid Update—which measures how economic reports impact growth forecasts—pegged second-quarter GDP at 2.9 percent.