What a difference a year makes.

Last October, we were fretting that gas-pump prices would skyrocket from $2.85 a gallon to $3.50.

Homeowners were watching housing prices plunge to a median $510,000, and a bag of groceries was expected to cost 7.5 percent more than the previous year. Los Angeles County’s unemployment rate was 5 percent.

Those were the good old days.

Today, we are counting our blessings that gas prices have finally dropped to $3.50 a gallon, and homeowners are watching their nest eggs crack, with the median house price in Southern California tumbling to $333,000. A bag of groceries is up 6.1 percent over a year ago. The county’s unemployment rate is 7.9 percent, and the credit markets are so tight you could bounce a bowling ball off them.

“The economy is going south and going south rapidly,” said Christopher Thornberg, principal in Beacon Economics, a Los Angeles research and consulting firm. “The American consumer is on the back end of a 12-year spending spree that is now coming to a crashing halt. The reason it is coming to a crashing halt is that the consumer has been overspending and the savings rate went to zero. It’s great for retailers but bad for the economy in the long run.”

Nobody is predicting a turnaround until at least the middle of next year, if then. For some, the word “recession” is being replaced by “depression.” Hopefully it won’t come to that, but for the short haul, the holiday season is shaping up to look a tad grim.

“You are looking at a situation where you have to see a substantial downturn in consumer spending to get in line with incomes, and this is a process that will occur over the next couple of years.” Thornberg noted.

The UCLA Anderson Forecast, released in late September, noted that the California economy is expected to remain weaker than the overall U.S. economy until real estate and related sectors bottom out and begin to recover.

Unemployment throughout the state is expected to remain in the mid-7 percent range (it is currently at 7.7 percent) because the state economy is not producing new jobs. UCLA economist Jerry Nickelsburg said the fourth quarter will see things getting worse before they get better. He projects a decline of personal income of 0.9 percent in the last quarter of 2008, after being adjusted for inflation, before recovering in the first quarter of 2009.