US economic situation was bad for over couple of years now.  I personally have been keeping my fingers crossed for a long time now. I realise its a slow process ..the coming of recession.

Here is a nice round up of the situation 

 Bonds are screaming recession right now, as stocks continue to spike higher on window dressing and short covering. Rates have been falling for several months now, but housing continues to implode at an alarming rate, now with falling prices across most of the country. The massive fiscal and trade deficits are putting the US dollar at major risk, as we depend on the investment of our foreign friends to finance our deficits, homeland security and the ever-growing wars on terror. No borrowing from the people, as our US personal savings rate is now negative, and growing deeper everyday. Think about it…if the tech (dotcom) bubble could induce a mild recession in 2001-2, what will the bursting of the greatest housing (lending) bubble of all-time produce? Sorry, but falling oil prices won’t save your day. Oil is still double what it was priced at in 2001-2. Still up over 100% from just four years ago! As for housing and lending, everybody is in…and many are and will continue to try to run for the exits… 
October 2006 has the potential for a historic sell-off that could put the US economy in a moderate to severe recession within days if not hours. The negative wealth effect of an imploding housing and lending bubble, coupled with selling in the public stock markets, will put the consumer (~70% of GDP) and our banks and lending institutions on ice for some time.  
Lastly, history tells us that soft landings rarely happen, inverted yield curves often lead to recession, the “end” of a rate hike cycle often precludes a significant decline in stock indices, and that sooner rather than later, the US equity and risk markets will begin the process of pricing in all of the above.