The COVID-19 outbreak is expected to have a sharp, short-lived impact on the U.S. economy, but some sectors heavy on social interactions like retail and tourism are likely to be hit hard, a U.S. economist said on Friday.

"We expect a sharp but short-lived contraction in economic activity if the disease evolves as aggressively," said Gabriel Ehrlich, director of the Research Seminar in Quantitative Economics at the University of Michigan.

"We expect the effects to be short-lived enough that we don't meet the official definition for the economy to enter a recession, although it could end up being a close call," said Ehrlich.

"We expect growth to start bouncing back in the third quarter of the year," he added.

Ehrlich noted that the fundamentals of the U.S. economy were in pretty good shape prior to the breakout of the epidemic in the United States.

"The underlying fundamentals of the U.S. economy remain strong," he noted.

"The stock market is not the economy," he said, referring to the recent big fluctuations in the asset market.

"It's definitely not good news how far the Dow has been falling and what we've been seeing in the asset markets. But asset markets are more volatile than the underlying economy," he explained.

Ehrlich did mention some sectors where the epidemic may cause the most disruption, including those that require social interaction, a lot of face-to-face contacts involved in something like a basketball game.

The travel sector, accommodation and food services and retail trade will also be disrupted, Ehrlich said.

"We might see some disruptions and stoppages in manufacturing activity, but we expect them to be scattershot or isolated," Ehrlich said. "We don't expect systematic shutdowns."

The service sector will be hit most. "It's in the service sector where we really think that the biggest drop-offs in demand are going to be felt," he said.

Ehrlich holds that the U.S. economy is much more robust today based on two factors: a lot of jobs can be done remotely today; and the manufacturing supply chain is leaner and more flexible today than it was 100 years ago.

"Modern manufacturers are extremely sophisticated at managing their supply chains, and they have done some incredible things in the past when their supply chains have been at risk of disruption," he said.