Morgan Stanley warns US recession is 'likely'

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Ahead of a decision today on US interest rates, American financial giant Morgan Stanley has predicted the economy is heading for recession.

In a report released overnight, entitled ‘Recession Coming’, the firm's managing directors Richard Berner and David Greenlaw show little optimism for US growth. The report states a “mild recession is now likely”, due to tightening of financial conditions, domestic capital spending weakness and a slowing of global growth. It predicts US domestic demand to contract by an annualised average 1% in each of the next three quarters, no growth in overall GDP for the year ending Q3 2008 and corporate earnings to contract by 5-10% during the same period. Morgan Stanley expects the Federal Reserve...

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