Jan Hatzius, Goldman’s chief economist, lowered the Q1 GDP growth forecast to zero from 0.7% and estimated a 5% contraction in Q2.
The economist is positive about the remainder of the year though, expecting US economic growth to see a 3% expansion in Q3 and a 4% expansion in Q4.
“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,” Hatzius said in a note to clients Sunday.
“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,” Hatzius added.
Factoring in the current estimates, the economists forecasts the US economy to grow 0.4% for the entire year, compared with a prior growth prediction of 1.2%.
The economist pointed out that these growth estimates depend on several factors including governmental response. “The uncertainty around all of these numbers is much greater than usual,” he warned.