Morgan Stanley Economist Expects Mild Recession

http://blogs.wsj.com/economics/2007/12/10/morgan-stanley-economists-recession-ahead/

"In a research note today, chief economists Richard Berner and David Greenlaw say tightening financial conditions, coming weakness in business capital spending and slowing global growth “have tipped the balance.” They say a “mild recession” is now likely, with domestic demand contracting by an average annualized rate of 1% in each of the next three quarters, no growth in overall GDP for the year ending in the third quarter of 2008 and corporate earnings contracting by 5% to 10%.
“Since the shock of tighter financial conditions surfaced in August, we’ve incrementally reduced our outlook for future growth,” the economists write. “But the time for incremental changes is over.” “Three factors have tipped the balance to the downside: Financial conditions continue to tighten, domestic economic weakness is broadening into capital spending, and global growth — for us, long the key bulwark against a downturn — is slowing.”
And while growth abroad remains strong, they say, slowdowns in Europe and Japan are undermining that. Their forecast is for global growth to slip to 4.3% in 2008 from 5% this year, though “the risks like south of that still-hearty pace” and translate into downside risks to growth in U.S. exports."