First-quarter economy looks bleaker by the day

Some economists now see first-quarter growth as negligible, and it could easily turn out to be negative.

Economists shaved already weak growth forecasts by a few more tenths Friday, after wholesale inventories fell 0.5 percent month over month in February, much more than the anticipated 0.1 percent decline. January was also revised down by 0.4 percent.

The closely watched Atlanta Fed GDPNow model now shows first-quarter growth tracking at 0.1 percent, compared to a 0.4 percent estimate earlier in the week. JPMorgan economists now forecast the economy only expanded by 0.2 percent in the first quarter, from 0.7 percent.

Barclays economists shaved tracking GDP growth for the first quarter to 0.3 percent from 0.4 percent.

"Weaker-than-expected wholesale inventories in February, along with downward revision to prior months' data, cut our estimate of total private inventory investment in Q1. Part of the decline in wholesale inventories in February look anomalous however, leading us to revise up our March wholesale inventory assumption," said Barclays economists in a note.

The JPMorgan economists, however, say there may be light at the end of the tunnel.

"While 1Q is adding up to be a clear disappointment relative to expectations from a few weeks ago, it now looks like the inventory correction was largely completed by the start of the second quarter, which is a favorable development for growth in that period. We now think that real inventories increased $54bn saar in 1Q, a rate that is likely to be sustainable moving forward," wrote JPMorgan economist Daniel Silver, in a note.

The CNBC/Moody's Analytics Rapid Update, a broader look at tracking forecasts of nine economists, was higher at 0.6 percent, as some economists continued to hold out hope that the economy grew close to 1 percent or higher in the first quarter. Economists in the survey shaved first-quarter growth by an average 0.1 percent based on inventories.

Whatever the first-quarter GDP number is when reported on April 28, it's likely to be revised and it could easily be negative — or positive. According to a CNBC study, the average error rate since 1990 in government quarterly GDP reports was plus or minus 1.3 percent.