Get ready for some depressing news about the US economy

We're about to get some terrible news about the US economy.

Sort of.

On Friday morning at 8:30 a.m. ET, the Bureau of Economic Analysis will release its second estimate of first quarter GDP, which is expected to show the economy contracted 0.8% in the first quarter.

The initial reading on first quarter GDP, released on April 29, showed the economy grew just 0.2%.

Ahead of that report, Wall Street expected the economy grew 1% to start 2015.

Subsequent data, however, showed that the economy was likely even weaker than first estimated to start the year.

Some economists, however, either aren't sure about these numbers or think there is reason we can look past what is, all things considered, some startling data about the economy.

Joe LaVorgna, chief US economist at Deutsche Bank, expects that Friday morning's reading will show the economy contracted by 1% to start the year. LaVorgna, though, thinks the BEA's seasonal adjustment procedures are overstating the economy's weakness during the first quarter.

"There appears to be a problem with the BEA's seasonal adjustment procedures because the weakness in Q1 output has been persistent during this economic expansion," LaVorgna wrote in a note to clients on Thursday.
"Importantly, the BEA recently disclosed that government statisticians are examining this apparent bias."

As a result, LaVorgna argues that we should perhaps focus on gross domestic income (GDI) as an alternative measure of the economy's underlying strength. We'll get our first look at Q1 GDI on Friday.

Ethan Harris, economist at Bank of America Merrill Lynch, who expects Friday's report will show the economy shrank 1.2% in the first quarter - the lowest expectation among Wall Street economists - wrote in a note to clients last week that every year it looks like the economy is headed into recession.

Here's Harris (emphasis added):

In what seems like an annual rite of spring, perma-bear economists have come out of hibernation, declaring a rising risk of recession. After all, they argue, GDP probably dropped in 1Q, and a variety of other key indicators point to recession risk, including credit and sales variables and the Treasury yield curve. We don't buy it. We believe the 1Q GDP data greatly exaggerate the weakness in the economy and only a very selective reading of the data signals a significant recession risk.

Harris adds that this similar data decline is often accompanied by a narrative from perma-bears who, "troll the news for indicators that 'have never been this weak outside of a recession.'"

Among this year's contenders are a decline in wholesale sales, an increase in credit rejections, and a flattening yield curve.

Harris concluded:

Looking ahead, it is much too soon to declare victory, but we expect the data to improve in the months ahead as seasonal and other distortions fade. This should pull in market pricing for the first rate hike and cause a modest strengthening of the dollar, in our view.

So we're probably going to get some bad news Friday morning. But the worst for economic data might be over.