Today is Thanksgiving, the day when, as the first Congress proclaimed in 1777, all Americans “may express the grateful Feelings of their Hearts”. But those with an eye on the economy would be forgiven if, this year, they felt a little miffed with their lot.

Some might say that the only people who should be thankful today are those who do not happen to live in the United States. Sure, the US is a wonderful country and, by any historic or global average, its people are vastly wealthy. But from today’s vantage point, predicting an improvement in US economic circumstances is a brave and perhaps foolhardy move.

Paul Samuelson, the American economist, famously quipped that Wall Street had “predicted nine out of the last five recessions”. In fact, economists are notably poor at predicting doom. Far more typical was the statement of the Harvard Economic Society, back in November 1929, that the recent stock market crash “will prove an intermediate movement and not the precursor of a business depression”. But there are now serious worries that a recession is not just a possibility but an imminent threat. John Hussman, who manages the $2.9 billion (£1.4 billion) Hussman Strategic Growth Fund in Maryland, claims that an American recession “is immediately ahead”.

When four things come together, he argues, it suggests that a recession is near. They are widening credit spreads, a moderate or flat yield curve, falling stock prices and a contraction in manufacturing activity, as measured by the purchasing managers’ index (PMI). On each criterion, America is in trouble.

The first red light is a widening in the gap in yields between commercial bonds and three-month Treasury bills. That rise suggests that the market is increasingly wary of bearing the risk of corporate default.

The second warning sign of a flight to safety is the high cost of long-term borrowing. The yield on the Treasury’s ten-year note yesterday briefly dropped below 4 per cent for the first time since 2005 as stocks fell.

Meanwhile, the stock market is, indeed, down. Mr Hussman says that his criterion here is met if the S&P 500 is lower than its level six months before. Yesterday the index turned negative for the year.

The only one of the four measures not currently being met is the manufacturing PMI, which at 50.9 in the latest report is still just above the line separating a rise in activity from a fall. But with employment growth very weak as well, Mr Hussman says this is also a bearish sign.

In a research note published earlier this month, he wrote: “In every instance we’ve observed these conditions [since 1963], the US economy has either already been in a recession, or has been within a few weeks of what turned out in hindsight to be the official beginning of a recession. There have been no false signals.”

Not everyone would agree that a recession is now probable – yet even the Federal Reserve has had to cut its growth forecast for next year, to between 1.8 per cent and 2.5 per cent. Meanwhile, it says that global inflationary pressures make it wary of cutting interest rates any further.

Then again, the British have little more reason to tuck into their tea and whoop with joy. Economists do not believe that the UK can decouple itself from the world’s biggest economy.

Paul Dales, of Capital Economics, said that, while Britain’s exports would suffer directly from a falling dollar, the indirect links between the two economies would do even more damage, whether in reduced inward investment to the UK, a loss of consumer confidence or lower stock market prices.

Alan Castle, of Lehman Brothers, said that the United States was a “good place to look” to see the possible downside risks to Britain’s housing market.

The Bank of England now predicts a sharp downturn in UK GDP growth next year.

Matthew Sharratt, of Bank of America, said: “The greater the US downturn, the greater the possibility that all areas of the world are going to be caught up.”

So little to be grateful for

Thanksgiving will be a dismal occasion for the many American casualties of the sub-prime mortgage debacle, as repossessions soar and house prices tumble

According to this month’s statistics from the National Association of Realtors, one in 43 households in Stockton, Southern California, had moved into the foreclosure process and were at risk of losing their home. In Naples, Florida, the foreclosure capital of America, it is possible to buy a condominium for less than it cost to build, so desperate are developers to off-load empty properties from their books

In the troubled housing market, however, buyers in a position to capitalise on the sub-prime crisis have plenty to be thankful for. It is a buyer’s market, according to the investment bank Dresdner Kleinwort in New York. The bank says that the number of houses changing hands is expected to slow nationally to 4.6 million a year, having peaked at an annual rate of 6.3 million in the third quarter of 2005

For those whose credit rating has not been wrecked by the financial crisis, the cost of servicing a mortgage on a discounted home is expected to be 40 per cent less in a year. Interest rates – which have fallen three quarters of a percentage point to 4.5 per cent in the past three months – are expected to fall to 3 per cent by Christmas 2008

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