A long shadow of economic gloom hangs over the impending Thanksgiving jollities. Across the United States, millions are approaching the holiday in a state of high anxiety, fearful over a deepening housing slump that threatens to plunge a once booming economy into a recession.

As conditions in the stricken US housing market have turned from bad to dire, so America’s mood has soured. With grim news this week that typical house prices are down 5 per cent from a year ago in their steepest fall since 1991, Americans may be wondering whether the darker backdrop of the Hallowe’en holiday just past is a more appropriate symbol for their country’s condition than the lighter tones of Thanksgiving.

Now, national woes over housing are being compounded by misery over record oil prices. The cost of fuel for US motorists is up by a quarter from a year ago, and the average home heating bill is set to double this winter thanks to dearer energy. Little wonder that Americans’ spirits have caught a nasty chill. In the past three months, consumer confidence has tumbled to levels lower than even those plumbed after the Black Monday shares crash in 1987.

Yet as chatter about recession around America’s breakfast tables grows louder, economists are split over how great the risk of a severe downturn next year really is. Most still foresee only a marked slowdown rather than anything worse.

This past week also brought some comfort from a stronger than expected performance for US growth in the third quarter – the best seen for a year-and-a-half. Yesterday brought good news, too, from the jobs market, as employers took on twice as many staff as expected last month.

Three key factors will now be crucial in determining how bad things become in the world’s biggest economy. The multibillion-dollar question is how severe a knock consumer spending, the driving force of US growth, takes from the double whammy of the housing slump and soaring fuel bills.

The blow is certain to be hard. Just how hard, though, will partly depend on how well Americans’ usually resilient confidence holds up. Hallowe’en has passed, but the extent of fear over personal and economic fortunes will be critical. The remaining two factors will play a big role in settling that.

First, does the credit squeeze in the financial markets persist, or get worse, so that banks become much less willing to finance the borrowing that pays for Americans’ high-spending habits.

Secondly, how far and fast can the US Federal Reserve cut interest rates to shore-up confidence, incomes and spending power. A big worry is that the Fed’s scope to act will be hampered by its serious worries over the extra inflationary threat being created by the leap in oil prices, and a slumping dollar.

Amid all the uncertainty, what is beyond doubt is that the danger of a deep US downturn is greater now than for a long time. Americans will have much to give thanks for if they can escape that painful fate.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive