In the United States, the “R” word is back. As people in the world’s biggest economy pick at Thanksgiving leftovers, the ghost looming over the remains of the feast is the spectre of recession.

With Christmas not far off, Americans are feeling anything but festive. Consumer confidence is at its lowest for a decade and a half, apart from in the immediate wake of Hurricane Katrina in 2005. Polls show that two fifths of US households expect a recession in the next year – up from fewer than a third only a month ago. Glowering at their home computers, the anxious spend ever more time typing the “R” word into search engines.

Yet a slide into recession is far from the main expectation of Wall Street’s forecasters. Certainly, most expect a nasty economic setback in the closing months of this year, and several quarters of sub-par growth. But the consensus is for the US economy to expand by a relatively healthy 2.2 per cent next year.

Who, then, is right? Could the churning guts of angst-gripped Americans on Main Street end up more accurate than the insights that wizards on Wall Street glean from their data-laden statistical models? Alas, the answer is yes. Few analysts saw the last two recessions before they hit and, sadly, the sages look more and more likely to emerge as being too sanguine. A US recession looks more probable than not.

The chief forces sending America lurching towards a painful downturn are well known. The slump in the housing market is proving far more severe than predicted and looks set to get worse. Average US house prices that have tumbled by 5 per cent in a year seem destined to fall much further as a glut of unsold properties is swollen by repossessions of more homes from sub-prime mortgage borrowers.

As house prices descend, fretting Americans will watch the withering of the housing wealth that has allowed them to carry on borrowing and sustain their high-spending habits. The inevitable result will be that the once-tireless consumers, the main motor for US growth, will retreat from the shops in droves.

Worse still, this impending blow to consumer demand will be made harder by the knock-on consequences of credit market turmoil and soaring oil prices. The credit squeeze is already driving up the cost of loans for households that can borrow, even as surging energy costs force them to devote more of their income to fuel bills.

All of this is bleak enough. But two further recessionary omens that are sending grim warning signals have been less remarked than they should be. First, a critical development is what is happening to US corporate profits. These are collapsing, marking an end to record runs of double-digit gains. Figures from Standard & Poor’s, highlighted by David Rosenberg, of Merrill Lynch, show that, with 90 per cent of US companies having reported third-quarter results, their operating earnings per share (which exclude write-offs) have plunged by 8.5 per cent from a year ago. That is against a rise of 9.6 per cent in the previous three months and is the worst performance since the end of 2001, when the US was most recently in recession. Quarter on quarter, earnings fell by 12.4 per cent, in the worst third-quarter outcome since 1989 – also a time of recession.

These are menacing trends. So far, the relative resilience of America’s share prices, even as the tribulations inflicted on its economy have multiplied, has been remarkable. Even amid the credit market shake-out, stock markets hit records as recently as last month. But with US shares now looking much poorer value, this prop for the economy looks liable to be knocked away.

If share prices do drop sharply, American households will face yet another hammer blow to their wealth, and to their willingness to spend. Economists estimate that falls in financial wealth have less impact on spending than declines in housing wealth, but that they feed through more rapidly. Falling profits will, at the same time, undermine companies’ readiness to keep investing, removing another of the remaining supports underpinning US growth.

The second underremarked factor that is amplifying America’s recession risk is the true state of the jobs market. On the face of it, employment trends ought to offer some reassurance. The payrolls figures closely tracked by the markets showed that 166,000 new jobs were created last month. Yet the reality may be quite different.

Rival figures from a survey of US households, seen as more reliable by some analysts, show average monthly gains in employment of only 37,000 this year. Merrill Lynch notes that this is 86 per cent down on 2006 levels, while if statistical adjustments to the payrolls data that factor in estimated new business start-ups are stripped out, those figures would show actual falls in employment.

Even more alarming, Mr Rosenberg points out that the number of Americans out of work for 15 weeks or more is climbing steadily – something that has happened before every US recession since the Seventies.

Doom-mongering is a dangerous game. Yet these and other omens look ever worse for America. With conditions in the credit markets deteriorating again in the past few days, hopes of avoiding recession are pinned by many on aggressive action by the Federal Reserve to cut interest rates. But with the Fed also fretting over inflationary threats from record oil prices and a plunging dollar, those hopes look to be hanging from a thread.

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