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July 25, 2008 4:54:27 PM CDT

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Morgan Stanley Warns of Recession

Posted Dec 12, 07 6:11 PM CST in US,  Business 

(Newser) – Morgan Stanley is warning that the US is headed to a recession, the Telegraph writes, indicating today that factors such as the continued housing slump and high cost of borrowing will lead to decreased demand and a “perfect storm” for consumers. A partial freeze on subprime mortgages and expected cuts in interest rates will only soften the blow.

"Slipping sales and tightening credit are pushing companies into liquidation mode, especially in motor vehicles," the report, titled “Recession Coming,” stated. Other banks have been cautious in their US forecasts, but Morgan Stanley is the first to issue the full recession alert. The bank is also predicting a slump in Japan and Europe, preventing them from helping the US.

Source Daily Telegraph (UK)

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U.S. Treasury Secretary Hank M. Paulson listens during a panel discussion at the Clinton Global Initiative Annual Meeting, Thursday, Sept. 27, 2007 in New York. His announcement of a partial freeze on...   (Associated Press)
Federal Reserve Board Chairman Ben Bernanke speaks at the CATO Institute's annual Monetary Conference, Wednesday, Nov. 14, 2007 in Washington. Morgan Stanley says the Fed will lower rates to "insure against...   (Associated Press)
Two homes are for sale at reduced prices in Lockport, N.Y., Tuesday, Nov. 27, 2007. The housing slump is one factor causing Morgan Stanley to issue a recession alert for the US. (AP Photo/David Duprey)   (Associated Press)
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