All the following is just my opinion, so consult your psychotherapist/doctor/parent/advisor before taking it too much to heart.
There has unquestionably been a significant shock to the economy from the seizing up of the credit/mortgage market. We are late in a US economic expansionary cycle anyway, plus you have a new administration on the horizon in another year, so it was inevitable that the economy would slow eventually. So for sure we will be seeing US economic growth slow in the next few quarters.
But I think that many have overlooked the offsetting positives, specifically Fed actions and export growth. The Fed has made it abundantly clear that they will take whatever actions necessary to cushion the blow and get economy back on its feet. That will include more rate cuts as well as more creative efforts to restore liquidity to the credit markets. Do not underestimate the ability of Uncle Ben & Co. to offset a capital markets shock. We also need to remember that any industry that exports and good or service is suddenly vastly more competitive than it was 6 months ago due to the USD slide. I will use an example I am intimately familiar with: coal exports are looking to be up roughly 20% this year, and all I see is future upside to exports. Multiply that by a gazillion different industries and you have a powerful economic stimulus.
I also look around and I see the world economy still humming. The UK and (to a lesser extent) the EU got hit by the credit crunch, albeit not as badly as the US. Russia, China, Brazil, India, Vietnam, South Africa, etc. remain quite robust. In fact, China appears to be trying increasingly desparate measures to restrain its growth as inflation starts to ignite over there. India is likely not far behind, and I don't really know how Brazil has managed not to overheat yet. These guys have the exact opposite problem that we do, so the different cycles should offset each other.
The US capital markets are bordering on mass hystery, especially in the arena of financials, mortgage securities and credit risk. Investors (and I use that term loosely)suddenly looked at what they owned for the first time, realized they had no clue how it worked, and started throwing stuff out the window at any price. The hysterical posts we have seen about banks, mortgage bailouts and what if SIPC didn't exist are illustrative. These securities are now priced at such low levels it would be almost impossible not to make money buying them. CMBS Aaa tranches are now priced as if commercial real estate will have worse losses than in the Depression. Does that fit teh available facts? I think not.
So while this is not the greatest economic time, it ain't teh worst by a long shot and current securities pricing is very, very attractive. I think financials, junk/credit risky bonds, mortgage-backed stuff and even munis are very attractively priced for the risk they represent. If the US economy goes into recesssion, it will be brief and shallow, accompanied by frenetic Fed activity. RE will not likely stabilize until 2009 or so, but I think that we will not see a catastrophic crash.