"The odds of a recession are now approaching 50 percent," Dana Johnson, Comerica Bank senior economist, told about 500 business leaders at the Santa Clara Convention Center. "We see a red hot trading sector and a frigidly cold housing sector, and in the middle are the consumers -- and consumer actions will determine whether we have a recession or a simply a slow-down."

Stanford University economist Peter Blair Henry told the Comerica Bank conference audience that a continuing expansion of the world economy will "cushion" a U.S. economic slowdown.

Johnson agreed: "The economy is in for a bumpy rather than a hard landing."

"We've never looked at a credit crunch like this," Johnson said. He predicted the impact of the tightening of credit on the U.S. economy will be "hurtful but not devastating."

Johnson said that anticipated additional cuts by the Federal Reserve in the federal funds rate of at least another 0.25 percent "will have a very important stimulus effect on the economy." The Federal Reserve's policy-making group, known as the Federal Open Market Committee, on Tuesday lowered its target for the federal funds rate, which regulates overnight loans between banks, to 3.5 percent, from 4.25 percent.

He also said that continued job growth will counteract some of the impact of the credit crunch. "Unemployment claims are still low and jobs are still increasing, so there is a nice underlying increase in real incomes," Johnson said.

"The US economy is going to slow -- whether there is a recession or not is somewhat beside the point," said Henry, who is an economics adviser to presidential candidate Sen. Barack Obama. "However, the U.S. economy will slow less than it would have in previous years, because we are more integrated into the world economy."