People wear medical masks as a precaution against coronavirus, walking around the in the streets of New York, United States on January 30, 2020.
Tayfun Coskun | Anadolu Agency via Getty Images
Barring a significant change in the news flow around the virus itself, analysts at the U.S. investment bank said late Thursday that they anticipate a 0.4 percentage point slowdown of U.S. annualized growth in the first quarter.
This will likely be followed by a subsequent rebound in the second quarter, “boosting” annualized growth by 0.3-0.4 percentage points.
Overall, Goldman analysts said they would expect the virus to result in “only a small net drag” on U.S. full-year 2020 growth of roughly 0.05 percentage points.
“The drag on growth operates mostly through lower tourism from China and lower U.S. goods exports to China,” they added.
Goldman’s prediction comes as market participants try to assess the potential economic fallout of the coronavirus outbreak.
China’s envoy to the United Nations said Friday that there have been more than 9,800 confirmed cases of the virus in China, with 213 deaths.
The World Health Organization (WHO) recognized the coronavirus as a global health emergency on Thursday, citing concern that the outbreak continued to spread to other countries with weaker health systems.
WHO’s designation was issued in order to help the United Nations health agency mobilize financial and political support to contain the outbreak.
The virus, which was first discovered in the Chinese city of Wuhan, has now spread to at least 18 other countries.
Risks ‘skewed towards a larger hit’
In a research note specifically addressing the impact of the coronavirus on U.S. economic growth, Goldman analysts warned that the risks of their net 0.05 percentage point drag on full-year economic growth were “skewed towards a larger hit.”
That’s because “a change in the news flow could lead to increased domestic risk aversion behavior or a sustained tightening in financial conditions.”
“A larger outbreak of the virus in the U.S. or the fear thereof could lead to a decline in domestic travel, commuting and shopping,” they added.
Speaking in Warren, Michigan on Thursday during a visit to a manufacturing plant, Trump said U.S. officials believe “we have it all under control.” The president added the virus constituted a “very small problem in this country.”
On Thursday, U.S. health officials confirmed the nation’s first person-to-person transmission of the virus.
The new patient is the husband of the Chicago woman who brought the infection back from Wuhan, China, the epicenter of the outbreak, health officials said during a press briefing.
— CNBC’s Michael Wayland, Berkeley Lovelace Jr & William Feuer contributed to this report.