BARCLAYS & JP MORGAN Cut Growth For 2Q GDP to 0.5%

Barclays cuts 2Q US real GDP forecast to 0.5% annual rate from 1.5%, noting a slowing in consumer spending, "which we attribute to the lagged effects of the Q1 13 tax increases," contracting government spending and "notably weaker" contribution from trade and inventories than the firm previously assumed. It sticks with 2.0% growth view for both 3Q and 4Q, saying some improvement in retail, auto sales and manufacturing production in May-June suggests 3Q growth "should be stronger." Barclays also thinks effects of sequester will continue to weigh and keep growth "to only a moderate pace" in 2H. JPMorgan also clipped its 2Q view to 0.5%, from 0.7%, citing weaker details in June durable goods orders.

(john.shipman@wsj.com)