The US has just announced its GDP (national output) figure for the first quarter of this year. In the first three months of the year, the US economy grew at a 1.6% annual rate. That's up from the last quarter of last year when it was rising at just 0.8%, but is much lower than the 4-5% rate experienced before. All the signs are that the economic recession of 2001, from which 2002 saw a recovery, is now returning in 2003. The US economy is heading for what economists like to call a 'double-dip'.

It's a pretty ugly picture. The measures of business activity both in manufacturing and in non-manufacturing sectors of the economy have fallen to their lowest levels since just after the 9/11 attacks. Job losses in US corporations have continued. Indeed, 450,000 jobs have been removed from payrolls in the last two months alone.

All this is happening not because of uncertainty about how the war in Iraq would play out. That's been the argument of the US Fed Chairman Alan Greenspan, newly confirmed in office until 2006 at least, after having a prostate operation. He's been telling all that will listen (and there are still many of those) that once Iraq was out of the way, the underlying strengths of the US economy would come through. With a stock market rebound and a little help from the great helmsman through more interest-rate cuts, prosperity and jobs would return.

Well there's little sign of it. Sure, the stock market has rallied a little after the military victory in Iraq was declared. But now the realities of a weak economy and currency are beginning to depress investors. The GDP figures were the first shots across the bows of optimism.

The key to the success of the US economy has been consumer spending. After the collapse of the great hi-tech investment binge at the start of the millennium and the following cliff-like drop of the stock market, the US economy has staggered on because American households have gone on spending like there would be no more millennia. How have they done this in an environment of fewer jobs, collapsing dot.com companies and bankrupt and fraudulent corporations and 9/11?

It's because another bubble in the US economy has continued to expand. House prices have gone on rising at an average 7-10% rate, much less than in the UK, but strong by US standards. And just like the UK, with mortgage rates so low, Americans have been able to refinance their mortgage loans at lower rates to save monthly outgoings. In addition, when refinancing, they have borrowed more. As a result, they have had extra cash. It's a one-off, but enough to keep spending going, especially on new cars being sold to them at huge discounts by General Motors and Ford, desperate to keep sales up.

So spending has gone on, but at the expense of profits. US corporate profitability has been falling since 1997 and the profit margin on sales is at an all-time low. Prices being charged by companies to their buyers are falling at the fastest rate since 1958! Americans are going to their shopping malls but the retailers and manufacturers who supply the goods in the shops are hardly making a buck.

That cannot go on and it isn't. Corporations are laying off workers, holding down wage increases and cutting investment in new technology to the bone to try and get profits back up. That's why the economy is slipping back into recession. Now if these job losses finally force American households to stop spending and stop borrowing on their houses, then the house bubble will burst and the US will dive.

Only Mr Greenspan with his interest rate cuts and Mr Bush with huge tax cuts and massive spending on new destroyers, tanks, aircraft and missiles stand in the way of economic recession and they will not prevail.

And the US is the key to the world economy. If the US catches a cold, then the rest of the world will catch Severe Acute Respiratory Syndrome (SARS). Already European business surveys point to an economy that is teetering on recession, while Japan's industry remains deep in a stagnant pool. The Japanese stock market is now at a 20-year low!

Of course, the politicians of the world go on spouting optimism and for the moment most seem to believe them. But the more realistic observers of the world capitalist economy are much more worried. They forecast less than 1% GDP growth for Europe and Japan this year and only 2% for the US. My guess is that even those figures won't be achieved.

Take the view of the World Trade Organisation. They reported that world trade in goods grew by 2.5% last year. That's up from a fall of 1% in 2001. But their forecast for this year is just 2-3%. These rates are way below that average achieved in the 1990s and are little better than the GDP growth forecasts. That means that each capitalist country cannot use exports to get out of recession. On the contrary, the battle for markets is going to heat up and trade disputes and protectionist measures are going to accelerate.

The WTO goes onto to say that: "the risks to our predictions are large, bearing in mind the continued sluggishness of the world economy, the conflict in Iraq and the possibility of the continuing spread of SARS".

Yes, there are three risks that lie ahead. The military battle in Iraq may be over, but the peace is not won for American imperialism. Already, the government is borrowing an extra $80bn to finance the war and the occupation. By most estimates it will have to spend three times that amount to maintain the planned four permanent military bases and the huge reconstruction plans that other countries are refusing to help finance.

And then there is North Korea. Kim il Jong has admitted (or is it "warned"?) the US that it has a nuclear arsenal and missiles to launch them. Before the peace is 'won' in Iraq, the US may have to launch a new attack on Korea's weaponry, possibly provoking a new Korean war similar to the 1950s. That first war cost the US a lot of money. A new one will be way more expensive, especially if the US has to finance the reconstruction of the poverty-stricken North at the end of it. The peace dividend is over and American households must expect to be taxed harder or watch the value of the dollar plunge, or both.

And now we have SARS. This virulent and pretty deadly cold-like virus has brought Asia's economies to a near standstill. SARS may not spread across the globe in a pandemic, but if it continues to paralyse business travel, tourism, shopping and health services in Hong Kong, Singapore, Taiwan and Beijing, then Asia's economies too will drop into recession – just at a time when the big three economies of the US, Europe and Japan are in no position to sustain much economic growth. It's gruesome prospect for capitalism. The post-Iraq euphoria has gone.