NEW YORK (Reuters) -
The housing slump has increased the chance of a U.S. recession and will further weaken home prices, Goldman Sachs Group said on Tuesday, cutting its stock recommendations on a slew of companies vulnerable to sluggish growth.
In a grim assessment of the U.S. economy's health, the investment bank said the Federal Reserve will have to cut its lending rate to banks by 1-1/2 percentage points to 3 percent in the next six to nine months to avert a recession.
Home prices will likely decline by 15 percent from their peak. But if the United States enters a recession -- which Goldman expects the economy to narrowly escape -- home prices could fall as much as 30 percent nationwide, it said.
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