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In a note to clients late Sunday, Jan Hatzius, Goldman’s Chief Economist, revised down the outlook for the economy in the first two quarters of 2020 due to the coronavirus impact.

Key quotes

“Lowered his first-quarter GDP growth forecast to zero from 0.7%.

Sees a 5% contraction in the second quarter, followed by a sharp snapback for the remainder of the year.

We expect US economic activity to contract sharply in the remainder of March and throughout April as virus fears lead consumers and businesses to continue to cut back on spending such as travel, entertainment, and restaurant meals.

Even with monetary and fiscal policy turning sharply further toward stimulus … these shutdowns and rising public anxiety about the virus are likely to lead to a sharp deterioration in economic activity in the rest of March and throughout April.

likelihood of “significant supply chain disruptions” as the outbreak sends business activity to a standstill.

The US economic growth should pick up in the second half of 2020.

Expects GDP growth of 3% in the third quarter and a 4% expansion in the final three months of the year.

Factoring in his new estimates, for 2020 he sees the economy growing 0.4%, compared with a prior growth estimate of 1.2%. 

The uncertainty around all of these numbers is much greater than usual.”