Ed Hyman, a widely followed economist on Wall Street, said the coronavirus outbreak could end up causing a recession in the U.S. and slashed his U.S. GDP forecast to zero growth in the second and third quarters of this year
"More cases are showing up in the U.S. and seem likely to be just the start," the Evercore ISI Chairman said in his note titled, "U.S. Virus 'Recession'" on Sunday. "Scope, severity, and duration are uncertain. How much it changes behavior in the U.S. is uncertain."
A fall in GDP in two consecutive quarters typically defines a recession. The U.S. economy grew 2.1% in the fourth quarter last year and 2.3% for the full year 2019.
Hyman has been ranked the top economist in Institutional Investor's annual poll for more than three decades. His call is one of the most pessimistic on Wall Street as many only see a temporary slowdown.
The stock market suffered a historic pullback last week as the fast-spreading coronavirus stoked fears of a prolonged global economic slowdown and drove investors out of risk assets. The Dow Jones Industrial Average and S&P 500 experienced their worst weekly performance since the financial crisis.
"Markets last week gave quite negative signals including the S&P, bond yields, oil, and credit spreads," said Hyman.
The U.S. has confirmed more than 70 cases of the coronavirus infection as of Sunday. The virus is rapidly spreading outside China in South Korea, Italy, Japan, the U.K. and Middle East.
In his bold call, Hyman also pointed to China's record low manufacturing activity. China's official Purchasing Managers' Index (PMI) tumbled to an all-time low of 35.7 in February from 50.0 in January. Hyman previously said he sees no economic growth in China in the first quarter due to the deadly virus.
"All this is quite uncertain, and we may be overreacting," Hyman said. "But we also don't want to underreact. In any event, all this creates more uncertainty for election outlooks."
Hyman expects GDP to rebound to 2% in the fourth quarter and 3% in 2021, assuming the virus starts to clear.
Goldman Sachs also cut its economic forecast due to the outbreak, seeing a 1.2% GDP growth in the first quarter.
– CNBC's Michael Bloom contributed reporting.
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Correction: A previous version of this story misstated the total number of confirmed coronavirus cases in the U.S.