Tomorrow, the Commerce Department releases its estimate of growth the second quarter of 2010, and the guessing game has already begun.  Will the economy show better growth than last quarter’s revised estimate of 2.7%, or will it confirm the pessimistic observations of the electorate about the economy?  The predictions coming from analysts are within a fairly narrow band, and none of which holds much promise to Democrats (figures provided by Amy Ritter, who researched the topic for me).

Let’s take them in descending order.  Even the most optimistic estimate, from Barclays, turns out to be a big comedown from their earlier estimate. They now predict a 3.0% annual growth rate:

Barclays GDP

Incorporating today’s weaker- than-expected news on business inventories and retail sales, we have cut our Q2 GDP forecast to 3.0%, below our previous tracking estimate of 3.5% and our official 4.5% forecast. Business inventories rose 0.1% in May, below our (0.3%) and the consensus (0.2%) forecast, and this suggests that inventory accumulation is unlikely to make as big a positive contribution to Q2 GDP as we previously projected. Meanwhile, as discussed below, although core retail sales rose 0.2% in June, downward revisions to April and May point to private consumption growth of about 2.5% in Q2 as a whole, compared to our previous forecast of 3.5%. Finally, May’s trade data suggest the trade deficit widened further in Q2, implying more of a drag on GDP growth than we had previously expected.

Market Watch reports that analysts they track predict that the number will come in below last quarter’s 2.7%:

The second quarter is getting no respect. Only a few weeks ago, the quarter was strutting along the beach. Now even economists are kicking sand in its face.

The main focus on the data in the coming week will be the first estimate of growth in the April-June quarter.

Economists said the second quarter real growth probably came in at an annual rate of just 2.5%, down from the 2.7% rate in the first quarter. …

Just a few weeks ago, economists were looking for a growth rate in the second quarter closer to 3%, and a month before that were predicting a number closer to 4%.

Why the reversal? MW says that the economic indicators from May and June turned gloomy enough to get analysts’ attention. Consumer spending has pulled back, jobs have not returned, and the stock market had its roughest quarter since the economic collapse. Their analysts expected the durable goods orders to drop 0.8%, too, and the drop of 1% may have them even more pessimistic than the weekend when MW published this analysis.

Speaking of pessimism, Macroadvisers says Q2 GDP will descend a little further, to 2.1%:

Since the start of the week incoming data have led us to revise down our estimate of Q2 GDP growth from 3.2% to just 2.1%.[1] Revisions to our GDP tracking estimate of this magnitude inside of a week are rare, and we cannot help but react with some concern to this downward revision.

The good news from Macroadvisers is that they see this as a final quarter of weakness, with indicators looking more positive for the rest of the year. However, this estimate is two weeks old; it missed the durable goods orders news from June, as well as the housing market data.

Finally, Goldman Sachs comes in at an even 2%, also a revision from a more optimistic previous estimate:

… the action by Goldman Sachs to cut its Q2 US GDP estimate to 2% from 3%, citing a loss of support from fiscal stimulus and inventory replenishment, state and local budget constraints, the excess supply of vacant housing, a lack of credit and weak employment gains.

GS also notes other bearish indicators, such as payrolls declining in 27 states in June, while also noting that it’s seen good news on corporate earnings and believe P/E ratios to be within range of a resumption of a bull market.

Even at the best estimate, 3.0%, it’s not going to be enough to make an argument for growth — and the problem is that most of the good news took place in April. Durable goods orders increased 2.9% in that month but dropped 0.8% in May and 1% in June. If consumer spending had increased during that period, it might make up for the orders drop, but consumer spending hit the skids at the same time. If I had to pick a number in this range, I’d guess 2.0%, but I’d be inclined to go a little lower. However, I don’t think that the economy tipped into negative territory, but merely declined to an even more anemic level of growth than seen in Q1.

What are your predictions? Select the growth level that comes closest to your own prediction:

Update: This won’t help, either:

Foreclosures rose in 3 of every four large U.S. metro areas in this year’s first half, likely ruling out sustained home price gains until 2013, real estate data company RealtyTrac said on Thursday.

Unemployment was the main culprit driving foreclosure actions on more than 1.6 million properties, the company said.

“We’re not going to see meaningful, sustainable home price appreciation while we’re seeing 75 percent of the markets have increases in foreclosures,” RealtyTrac senior vice president Rick Sharga said in an interview.

It’s really all about jobs. Until we quit penalizing and strangling capital, none of this will improve more than incrementally.