Mr Gault lowered his fourth-quarter GDP growth forecast from 3.5 per cent to 3 per cent after the trade numbers were released in the middle of last month.

Consumers in the US were only able to sustain their shopping spree - the driving force in the current economic expansion - with the help of lower petrol prices and stronger than expected job growth.

The commerce department early last month revised US economic growth in the third quarter upward to a brisk annual rate of 4.3 per cent. GDP growth for the whole year is now expected to come in at 3.5 per cent, according to the Council of Economic Advisers.

These numbers are a big relief, after Hurricane Katrina slammed into the US Gulf Coast on August 29, causing more economic damage than any recent catastrophe in the US.

Estimates suggest that total losses - insured and uninsured - from Katrina and the succeeding Hurricane Rita approach US$140 billion. The biggest damage - besides more than 1,200 deaths - was in housing and infrastructure.

'Hurricanes Katrina and Rita have temporarily reduced the growth of national economic output, but the overall effects that recovery and rebuilding will have on economic activity may more than offset that drag,' said Douglas Holtz-Eakin, director of the Congressional Budget Office in a hearing on October 6.

One of the US industries that took a heavy assault last year from Asian competitors is the car sector, with sales by Detroit's Big Three hitting a seven-year low in October and the combined market share of General Motors, Ford and DaimlerChrysler plummeting to 54.3 per cent, largely because of huge inroads by Toyota and Nissan.

And with China gearing up to sell cars in the US, experts at JD Power & Associates and Global Insight predict that the Big Three's domestic market share could fall even below 45 per cent, from more than 70 per cent in 1990.

The crisis of its biggest customers in Detroit forced the world's biggest car parts supplier, Delphi, to file for bankruptcy protection in October. The company is asking the United Auto Workers for pay cuts of up to 60 per cent, accelerating a race to the bottom that is evolving as a serious threat to the American middle class.

GM has announced plans to eliminate 30,000 jobs this year and Ford is expected to announce a similar job reduction this month.

The gloom in the US car industry is only topped by its airlines. In September, Delta - the third-biggest US carrier - and fourth-largest Northwestern sought Chapter 11 bankruptcy protection, joining two of America's six main carriers in the same sorry state. According to industry figures, the six biggest airlines are expected to lose US$10 billion this year.

Rising raw material costs, heavy pension and health costs, inflexible labour unions and cheap Asian imports are forcing more and more US companies to go abroad.

The last remaining driving force in the economy, the booming real estate market, is also showing signs of a slowdown. Housing starts fell 5.6 per cent in October, the slowest since March, according to the commerce department.

Inventories of unsold homes were the highest since 1986, as demand from speculators waned and mortgage rates rose from a four-decade low in 2003.

'We believe housing is due for a sustained decline,' said Michael Bazdarich, economist at the UCLA Anderson Centre. 'The slowdown is going to take some of the wind out of the sails of the economy.'

The forecasting group said a housing slowdown would push growth down to 2.8 per cent this year and 2.5 per cent next year.

'Monetary tightening will eventually trim housing activity and growth in home prices and prompt consumers to rebuild savings,' said Morgan Stanley economist Richard Berner.

That does not bode well for the economy, as housing's contribution has approached half of the 3.8 per cent annualised GDP growth for the first three quarters last year.

Real estate, home building, mortgage financing and other home-related sectors together accounted for 9.7 per cent of domestic employment in the second quarter of last year, Mark Zandi, chief economist of Economy.com, said.

America's most powerful economist will not witness the slowdown from his office, analysts say. Federal Reserve chairman Alan Greenspan will hand over the reins at the central bank to Ben Bernanke on February 1.

Mr Bernanke is chairman of President George Bush's Council of Economic Advisers, but he served on the Fed's board of governors for nearly three years before moving to the White House in June last year. At the central bank, he espoused the virtues of an inflation target to guide monetary policy.

During his 18-year tenure, Mr Greenspan steered the world's largest economy through the 1987 stock market crash, a recession, the savings-and-loan crisis in the early 1990s, and the slowdown after the September 11 terrorist attacks. But he has also become the target of criticism in recent years. 'Greenspan's tenure has left America bobbing atop an ocean of red ink ready to capsize with the first gust of recession,' wrote one of the harshest critics of the Bush administration, Mike Whitney, at dissidentvoice.org.

For Mr Bush, that sounds like a voice from another planet. 'The economy is strong, business is booming and the people in this country are working,' he said last month.

Only days later, the US House of Representatives passed the last and biggest part of some US$95 billion in tax cuts, potentially pouring more red ink in which some undisciplined American consumers and corporates may just drown themselves this year.