Q1 GDP Likely to Be Revised Up; Q2 GDP Seeing Major Tailwinds

Current official estimates of GDP growth over the last year look like this

My baseline assumption is that this will be edged up both on stronger residential construction and stronger business investment than originally estimated. A revised figure of 3.0% is not out of the question.

This would put Q1 GDP at a more rapid pace that Q4, and create a nice stair step coming out of 2011.

Q2 has just begun but there are major tailwinds moving in. The biggest of course, is utility consumption.

Housing and utility consumption faced major declines over the last two quarters, subtracting just under one percentage point from GDP, as heating consumption collapsed over the winter.

That is likely to bounce back strongly in Q2 if utility use simply returns to normal. This means that we could be starting out with a point or so base on which to build.

Now, as a intellectual matter I tend to discount the importance of the GDP report anyhow, but I do understand that it is the most widely looked at benchmark and so folks will probably be interested in evidence that we are seeing accelerating GDP growth all the way from 2011:Q1 to 2012:Q2.