Morgan Stanley Warns of Recession

Housing slump, cost of borrowing could lead to 'perfect storm' in US economy
By Kevin Langbaum,  Newser User
Posted Dec 12, 2007 6:11 PM CST
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)
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(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.