Even with record earnings thanks to the slashing of the corporate tax rate from 35 to 21 percent, Morgan Stanley is pointing out a trend it says is hard to stop, saying “Earnings Recession is here.”

The “earnings recession” also has Morgan Stanley slashing its 2019 S&P 500 growth forecast from 4.3 percent all the way down to 1 percent.

Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, is predicting a year-end finish at 2,750. It’s currently at 2,705 as of 3 p.m. Monday.

Per Bloomberg:

At 5.4 percent, the expected rate of growth among analysts tracked by Bloomberg has come down from 7.7 percent in January. That’s still too high, warned Wilson, who just cut his growth prediction to 1 percent.

The strategist, who had previously called for a 4.3 percent increase for the full year, said the current reporting season has validated his forecast for two consecutive quarters of earnings declines. While the S&P 500 has climbed almost more than 4 percent over the past four weeks, poised for the best return during any earnings periods since 2014, analysts have been busy trimming their estimates. As a result, corporate America is expected to head for negative profit growth for the first time in three years during the January-March period.

“Our earnings recession call is playing out even faster than we expected,” Wilson wrote in a note to clients. “Earnings recession is here.”

While Wilson turned less optimistic on corporate earnings, he’s sticking to his forecast for the S&P 500 to end the year at 2,750 because lower interest rates support equity valuations. Further profit downgrades don’t necessarily mean lower share prices, but investors should prepare for turbulence as Morgan Stanley’s study over past revision cycles showed market swings tends to widen when earning sentiment sours.

“This earnings slowdown could have real knock-on effects to corporate behavior like spending and hiring which then put further pressure on growth,” he said. “Whether prices move higher or lower, volatility tends to rise meaningfully.”