Merrill Lynch predicts 2Q GDP at horrid 1.1% annual rate

Calculated Risk has this from Merrill Lynch:

Today’s weak retail sales report leaves Q2 GDP tracking a meager 1.1%. We expect the economy to remain weak through the rest of the year with growth of only 1.3% in Q3 and 1.0% in Q4. This translates to GDP growth of only 1.3% Q4/Q4, significantly below the Fed’s forecast of 1.9-2.4%.

Lower sales, higher inventories, falling interest rates, all point to a slowing economy. From Reuters:

U.S. retail sales fell in June for the third straight month, the longest run of consecutive drops since 2008 when the country was mired in recession. Sales slipped 0.5 percent, with declines across a wide swath of industries from electronics and cars to building supplies, the Commerce Department said on Monday. Analysts had expected a small increase. "Evidence is increasingly clear that the U.S. economy is slowing," said Jim Baird, an investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan. The report adds to a spate of soft economic data that is raising pressure on President Barack Obama ahead of his November re-election bid. Republican challenger Mitt Romney is focusing his campaign on the weak economy, which has plagued Obama's presidency. The dollar declined against the euro and the yield on 10-year U.S. government bonds dropped to an all-time low as the data stoked worries the economy was floundering and could need more help from the Federal Reserve. U.S. stock prices san k. . . .

The JP Morgan forecast is here.

This morning we lowered our tracking of Q2 GDP growth from 1.7% to 1.4%. For some time now we have noted that our Q3 GDP call — which was already below consensus at 2.0% — had risks that were skewed to the downside. . . .

UPDATE: Economists Expect Growth in Second Quarter Was Weak 1.2%

Economists surveyed by Dow Jones Newswires expect real GDP to have grown at an annual rate of just 1.2% last quarter, down from the tepid 1.9% in the first quarter. The expected rate would be the slowest growth since 0.4% posted in the first quarter of 2011. . . .

UPDATE: Computer sales keep dropping.

"For the first time since 2001, client PC shipments have declined sequentially for three consecutive quarters-and have been below historical averages for the last seven quarters," AMD CEO Rory Read said during the chip supplier's second quarter earnings conference call. . . .