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On a recent visit to New York I found the mood to be almost universally gloomy with – predictably – housing and gas prices the dominant themes. TV news channels ran an almost constant stream of features on the cost of motoring - a gallon of petrol went through the $4 (£2.05) mark for the first time recently, up from $3.10 a year ago, a 30 per cent rise - with disgruntled car owners explaining why they are staying at home during the driving season. One news channel has a permanent banner at the bottom of the screen reading "America's Oil Crisis" - signalling that this is as big a deal as "America's War on Terror" post 9/11.

It's difficult to see how higher fuel and food prices, combined with plummeting house prices - down over 14 per cent year-on-year - won’t lead to a collapse in consumption. As consumption makes up more than two-thirds of US growth, a recession still looks likely.

However there are a couple of things that do mitigate the doom and gloom for the US consumer. First is the fiscal stimulus from the tax rebate cheques which have given most families anything from around $600 to $1500. Around 30 per cent to 40 per cent of this money is likely to be spent rather than saved or used to repay debt. Thus retail sales numbers for May, June and July could look surprisingly strong and could keep GDP growth in positive territory. There are rumours of a further tax stimulus package later this year too.

Second, US employment is much stronger than it was at the time of the 2001 downturn. Back then, the economy was regularly shedding from 150,000 to over 300,000 jobs monthly. Last month's reading was a loss of 49,000 jobs and the biggest monthly fall so far was 88,000 in March. While big negative revisions to these recent data are possible, the employment background is less of a headwind to growth than it has been historically.

The 2001 recession was a corporate recession – companies had overdone their capex during the tech bubble and had got their balance sheets in a mess, taking on too much debt. Corporate recovery was about sorting out balance sheets and about downsizing the workforce. As a result companies are entering this downturn with a much leaner labour force and are unlikely to need to cull to the same extent this time.

However while US firms are not laying off employees like they did in the early 1990s, they are cutting back on hours worked, and more importantly, for those people who don't have a job, finding one is becoming extremely difficult. The unemployment rate is rising and the jobs slowdown is spreading to all sectors of the economy. But for the time being it is the increase in the cost of living that is hurting, not the loss of income – yet.

Jim Leaviss is head of retail fixed income at M&G