GARY SHILLING: Q2 GDP Growth Was Closer To 1%, Not The 3% Everyone's Expecting

Economists estimate real GDP jumped 3.1% in Q2 after plunging 2.9% in Q1.

They believe that the economic freeze caused by the unusually harsh winter will be reversed in a spring economic thaw.

They see Q2 growth as a prelude to "3%-plus growth in the second half of the year," writes economist Gary Shilling.

In a special report titled 'No Spring Thaw', Shilling warns "the herd is likely to be disappointed."

Here's why:

• "Consumer spending is 69% of GDP and it barely grew in the quarter." Real consumer spending was down 0.2% in April, and 0.1% in May. Shilling expects it to rise a modest 0.1% in June based on its correlation with retail sales.
• Real wage growth has been "absent." The absence of real wage growth failed to bolster consumer spending. "Emphasis has also been on lower-paid part-time jobs. In June, they rose 1.1 million while full-timer positions dropped 708,000."
• Residential construction was most likely weak in Q2. "The earlier recovery in housing was driven by rentals, not new homeowners who are suppressed by uncertain jobs, low credit scores, the lack of 20% down-payments, huge student loan debts and the knowledge that house prices can and did fall by one-third," he writes.
• Net exports were weak in April and May. Remember, the ugly Q1 GDP number was primarily attributed to a plunge in net exports, which took 150 basis points from real GDP.
• "Real federal as well as state and local spending probably continued their declining trends."

The one wild card could be inventory investment according to Shilling. "But barring a big jump in inventories, second quarter real GDP growth was probably a lot closer to 1% than 3%. It could even be a negative number."

"A low second quarter real GDP number will kill the conviction that the first quarter drop was only an anomaly and it will spawn agonizing reappraisals for the rest of the year. It could put the Fed on hold at least into 2016 and be great for Treasury bonds. But for stocks, look out below!"

This is a message Shilling communicated to Business Insider readers when he offered his "Most Important Chart In The World." See below.

We get Q2 GDP at 8:30 a.m. ET on Wednesday.