by Calculated Risk on 12/10/2007 06:02:00 PM

Update: Here is the Morgan Stanley piece. (hat tip Carlomagno)

From Rex Nutting at MarketWatch: Mild recession likely, Morgan Stanley says

The U.S. economy is likely to slip into a mild recession in 2008, said economists at Morgan Stanley, which is the first major Wall Street firm to predict a recession.

Domestic demand is expected to fall 1% annualized over the next three quarters with zero growth in gross domestic product and a 5% to 10% drop in corporate earnings, said chief economist Richard Berner and U.S. economist David Greenlaw in an updated forecast on the firm's Global Economic Forum Web site. For the full year, Morgan Stanley sees 1% growth.
...
"Those negatives sound like the recipe for a serious recession, so why do we think it will be mild?" Berner and Greenlaw wrote. "Although it is slowing, global growth is still strong, and we expect that net exports will add about 3/4 percentage point to growth through the end of 2008. In addition, we think that corporate capital and hiring discipline in this expansion mean that there are no business-investment or labor-market excesses to unwind, adding to U.S. economic resilience."

Also moving into the recession camp, according to the Wall Street Journal, is Paul Kasriel of Northern Trust, the 2006 recipient of the Lawrence R. Klein Award for Blue Chip Forecasting Accuracy.