Millions of U.S. jobs have been lost and more layoffs are expected. Banks have reined in lending after a credit crisis and a housing collapse that has sent foreclosures surging.
On Wall Street, several investment banks have collapsed. The U.S. stock market has lost more than 40 percent of its value. Behemoths like Citigroup have struggled to survive.
Tough times also threaten the once-mighty U.S. auto industry, with General Motors and Chrysler LLC seeking billions in aid from Washington and warning of potential collapse if they do not get a bailout.
"We are seeing the beginning of the end of the American empire," said Howard Zinn, author of "A People’s History of the United States."
On the right, former International Monetary Fund chief economist Simon Johnson sums up the view this way: "Capitalism is not dead, there is no alternative to capitalism.
"The myth of wonderful capitalism is dead but not capitalism, just the nice warm fuzziness."
Every week, there is more hard-to-believe news; a Wall Street trader arrested on charges of a $50 billion investor fraud, and the governor of Illinois accused of trying to sell the Senate seat vacated by President-elect Barack Obama.
There is now so little respect for President George W. Bush that an Iraqi journalist threw his shoes at him on Sunday, a grievous insult in Iraqi culture. Bush prepares to leave office next month with a presidential legacy battered by the grim economy and the unpopular war in Iraq.
Everyone agrees the situation in America, now officially in recession, is certainly bleak.
"Everyone wants to save and no one wants to spend. That makes it very hard to get growth," said Johnson, likening the U.S. economic predicament to having fallen into a bathtub and struggling to get traction to climb up the slippery wall.
THE COMING GLOOM
Experts are uncertain how long the American economic malaise will linger. Some predict a year or two, others fear a slowdown of as long as a decade, reminiscent of Japan’s lost decade of the 1990s.
"Things are bad," said Alan Ruskin, chief international strategist at RBS Greenwich Capital. "This is not a typical recession, but it is still not like the Great Depression."
While there has been much talk about the misery of the 1930s, economists say this slump will not be so dramatic.
Massachusetts Institute of Technology economist Johnson noted, "If you had gone to Tokyo (in the 1990s), you would have seen that it looked quite respectable and people looked reasonably happy, but there was no growth."
Likewise, he said Americans should brace for "low growth not fast enough to create meaningful jobs for people" for the next five to 10 years.
A poll released by Marist College Institute for Public Opinion on Monday showed 24 percent of Americans thought it likely they would be laid off or see their working hours cut in the coming year.
Andre Myrtil, who owns a small technology outsourcing business in New York, sums up the business environment for many, saying he is getting less work and companies are being slower in paying him. "There’s no work. My phone’s not ringing."
"I’m not throwing in the towel yet," he said. "It can only get better, but time will tell."
Many believe the only way out of the mess is the government spending huge amounts of money. But how much exactly is needed? "There is the capacity to literally have helicopter drops of cash," Ruskin said.
Most expect Obama will approve a fiscal stimulus package worth hundreds of billions of dollars soon after his inauguration on January 20.
"American economic dominance has diminished and it is going to take some time for our economy to grow again. We are in for an extensive period of slowdown or decline," said Howard Chernick, an economics professor at New York’s Hunter College.
"There is really only the willpower of the government to get us out of this," he said.
As well as spending huge amounts of money as happened during President Franklin Roosevelt’s New Deal to confront the Depression, Chernick said Obama must deliver on another of his campaign themes — "hope."
"Confidence will be a big issue and there, you can only hope," said Chernick. "One of the lessons historians took away from the New Deal was that Roosevelt had some potency, not just in fiscal decisions, but in instilling confidence."
HOPE AND CONFIDENCE
But Zinn said, "Unless bold measures are taken to change the course of the nation, we are heading for trouble."
"Obama has not shown signs of being the right person for this. He has not shown the right boldness of vision."
For Zinn, Americans could push Obama to do what is needed with actions like those last week when workers in a Chicago factory staged a successful sit-in, demanding severance pay and vacation time they earned before being laid off.
"That is a glimpse of what would be needed on a very large scale — civil disobedience and direct action to dramatize what problems people have … to push Obama to being the kind of president he could be," Zinn said.
For others, America must keep faith with capitalism.
"There is still some faith in markets even if there is now acceptance that financial sectors need considerably oversight," said Ruskin. "The problem is, the horse has shot out of the barn and is well over the horizon."