U.S. faces severe, prolonged recession: Merrill Lynch

From Reuters :

Merrill Lynch warned that the United States faces the prospect of a severe and prolonged recession as consumers cut spending, and credit-card stocks could be hit as current valuations and market estimates for the U.S. consumer finance sector assume only a moderate downturn.

Recently released economic data suggests debt-laden and cash-strapped U.S. consumers are becoming increasingly more cautious on spending and falling further behind on debt payments, analyst Kenneth Bruce said.

The U.S. consumer finance sector will likely face credit and spending-related headwinds in the first quarter, and credit-card and travel-services firm American Express Co may be hit hardest due to slower revenue growth and higher credit losses, Bruce said.