JPMorgan says the economy barely grew in the first quarter

JPMorgan Chase economists are forecasting first quarter growth of just 0.4 percent, barely a positive pulse.

The economists cut their view from 0.6 percent on Wednesday, after reviewing annual revisions to retail sales data — reflecting a potentially worrisome trend of consumer weakening also seen in softer auto sales and retail sales data recently.

People carry shopping bags outside Macy's Herald Square in New York.
Andrew Kelly | Reuters
People carry shopping bags outside Macy's Herald Square in New York.

CNBC/Moody's Analytics Rapid Update, based on a survey of economists, shows average growth forecasts for the first quarter at 1.2 percent, as of Tuesday. Economists also saw growth tracking at an average 1 percent, based on actual data releases so far. First quarter GDP data will be released Friday.

A Census Bureau report trimmed retail sales growth to 3.7 percent, from 4 percent. But the control retail sales, used to calculate GDP, fell from 4.1 percent to 3 percent, JPMorgan said. That figure excludes food services, auto dealers, gasoline stations and building materials outlets.

"We now think that real consumption increased only 0.6 percent saar in 1Q [previously: 0.9 percent]," they wrote. In March, retail sales slipped by a surprise 0.2 percent, the second monthly decline.

Economists mostly expect second quarter growth to pick up, and many blame first quarter weakness on a soft patch and weather.

Meanwhile, UBS economists also reduced expectations for first quarter consumption to 0.5 percent, but they kept their GDP tracking estimate at 0.9 percent for first quarter.

They noted Thursday's data on retail and wholesale inventories, merchandise trade and durables shipments could impact their first quarter GDP tracking estimate.