Good Could Be Bad in Friday's GDP Report

Tomorrow's second-quarter gross domestic product release could be one of those "good is bad" reports.

The economy, save for consumer spending, was generally weak in the previous quarter, but a number of factors could end up making the report look better than the actual, underlying strength in the economy.

The consensus forecast among economists polled by Reuters was for a 0.9% increase in GDP in the second quarter, following a 1.2% increase in the first quarter. However, some believe GDP could end up around 1.5%, and even perhaps as high as 2%, because of the sharp decline in the trade deficit and a potential rise in inventories in the second quarter.

"We could wind up with a 2% figure for all the wrong reasons," said Joel Naroff, president of Naroff Economic Advisors. "It would give the absolute wrong picture about the economy. The details are going to be more important this month." ...