May’s U.S. trade figures have economists feeling quite a bit better about second-quarter GDP. The surprising strength in exports should provide a big lift.

JPMorgan economist Michael Feroli thinks trade may contribute almost 2 percentage points to second-quarter growth, and he adjusted his Q2 GDP forecast to a  much-less-dire decline at a 0.5 percent annual rate from his earlier view of -2.0 percent. Goldman Sachs economist Jan Hatzius is also looking at a less-ugly Q2.

“Absent significant downside surprises in either retail sales or business inventory data next week, this report suggests that our standing estimate for real GDP in Q2 — down 3 percent at an annual rate — is too negative,” he wrote in a note to clients.

Of course, considering that the rest of the world is also in a recession, it begs the question — where are these exports going?

Goldman Sachs has long been a keen advocate of the BRICs — Brazil, Russia, India and China – as a new power tool for world growth. Indeed, it is credited with coining the phrase.

In a note, the firm says that even though the group is being hit differently by the global slowdown — Russia suffering most,  India least — a uniform drive from the four will return as soon as the cycle starts to turn.

It is predicting big things as early as next year.  It says China’s economy is already the third largest in the world and it sees it eclipsing current No. 2  Japan as early as 2010. Furthermore, as a group, the four countries are set to be dominant.

“Our long-term projections envisage the BRICs as an aggregate surpassing the G7 by 2035,” it says.

Goldman Sachs is previewing the 2009 outlook from a light hearted perspective. “We hope readers take these thoughts in the spirit that they are meant and don’t take any offence at any of the contents,” reads the disclaimer.

The year starts with an interesting twist in the UK, where Chelsea Football Club releases a letter written to incoming US Treasury Secretary, Tim Geithner, asking whether if they signed David Beckham, would it make them eligible for TARP funds?

In February, Russian Prime Minister Putin declares that the American word recession would not be translated into Russian.

In March, President Obama announces an initiative for his infrastructure projects. Any ex Wall Street bankers that succeeded in building bridges and roads in half the planned time would be eligible for special bonuses to help keep them in the lifestyle they were used to.

In July, in yet another "who could have dreamt of that" event, Chrysler, General Motors, Ford, BMW, Daimler, Fiat, Volkswagen, and Peugeot, merge into one company, to be named "Worldcarco". Toyota says they expect their share of the global auto market to be higher than that of Worldcarco.

In August, Chelsea, now under the ownership of the US Treasury, announces that they would no longer play football in the UK, but are joining the NFL in the US. Manchester City, having been relegated from the Premiership in May, say they are looking forward to the new season, and to prove their status as the world’s wealthiest football club.

Towards the end of the year, the Finance Ministers of the four BRIC countries meet for the first time and announce that they would not attend the IMF annual meetings. In a follow up statement, the BRIC Finance Ministers say that they are considering inviting the G7 countries to occasionally join them as members of a new "out reach” group.

JPMorgan economist Michael Feroli is getting that sinking feeling.

He is out with a bold forecast calling for the Federal Reserve to drop its benchmark interest rate to zero by January.

“We believe the Fed then continues to conduct a zero-interest rate policy (ZIRP) for the remainder of 2009,” he wrote in a note to clients. “The change in our call is motivated in large part by the risk that deflation becomes more likely in an environment where labor market slack is building, and ongoing financial tightening is delaying the prospect that slack begins to get worked down.”

Ugly economic data and growing concern about a deep U.S. recession has prompted a flurry of aggressive — and gloomy — calls from the big Wall Street firms. At Goldman Sachs, economist Andrew Tilton has built two scenarios for the fourth quarter that he calls “worst case” and “just awful”.

In his worst-case scenario, the economy contracts at a 7.8 percent rate, the worst since a matching decline in 1980. His just awful view calls for a mere 6 percent drop.

We don’t want to end on a sour note. With the economy in the (ahem) tank, we’ll leave you with a bit of comic relief, courtesty of our colleages in Canberra who bring us this tale of Australian toilet art.  

It’s Thursday and that means another installment of U.S. jobless claims. For those keeping score at home, workers filing new claims for jobless benefits rose by a larger-than-expected 15,000 last week, taking the grand total to 478,000. Add in the daily dose of poor earnings results and the mood on Wall Street is looking grim. Again.

While the White House still won’t use the “R” word, company after company is warning of recession. Dow Chemical says “all bets are off” now that the global economy is sinking. Even Goldman Sachs is hurting.

So who isn’t suffering? Cigarette maker Altria. It seems they still managed to turn in a healthy quarterly profit.

Now that you’re feeling thoroughly depressed, allow us to offer a little levity, courtesy of our fake-news friends at The Onion. Read all the way to the end of their “dollar bill” cover story for a gem of a (fabricated) quote from former Lehman Brothers CEO Richard Fuld Jr.A woman smokes a cigarette in a bar in downtown Zurich September 28, 2008.