I know not everyone here is based in the U.S. but for those that are turn on the news at any time of the day and you will hear recession, high gas prices, high food prices and most importantly of all no predictions or even evidence of when we might see the turn around. If gas remains at 4$ a gallon till the holiday season(may or may not) it will without a doubt effect spending.

-This year memorial day travel was as low as it has been sense 9/11

So if systems with high prices aren't selling as easy as things like the Wii and no chance of a price drop in U.S due to recession = weak dollar do you think holiday sales will suffer? 

The X360 will drop in the price before/during the holiday and the PS3 will follow. No need to comment about the Wii :)

Gas will be rising even more, but people will still spend money with credit cards with money they don't have.

Actually, there was another article somewhere that talked about video games being recession proof.  The reasoning is that as gas goes up, we are hitting $10-20 in gas to go anywhere to do things.  This keeps people at home. This allows more time to play games.  So if it costs $15 to go to the movies, $20 in tickets, $10 for drinks/popcorn, you are quickly paying as much for 2 hrs of entertainment versus a good video game which costs $50-60 and provides 50+ hours of entertainment.

The main price component of video game cost is salaries, not gas prices.  Salaries are staying stable, so while gas prices are making all other consumer products go up in price (i.e. groceries), video games are actually reaching the consumer bases where we will see discount games and will likely see another cut for the PS3 and Xbox360. 

The video game industry will be fine unless gas prices get to $6 and cause panic about whether you can afford to go to work.

High gas prices could benefit the gaming industry since a lot of people will be staying home.

i think people will travel less,like this they will stay mostly home and play games

Right, but we are also in an unofficial recession which means a weak and getting weaker dollar which makes people's hard earned money worth less, gas prices effect more than just travel is the sad truth. The idea of it being a good investment if poeple stay home more often is a nice spin on it thought, never thought of it that way.

Unless massive lay-offs start to happen, I don't think the US will have to worry too much.

Honestly? The recessions that I lived through here in Holland where barely noticeable. Sure, unemployment rose a few percentage-points and yes retail-revenue got kicked back 12 percent but overall it wasn't the end of the world.
Better yet as shown in graphs, year over year the amount of sales in the games-sector kept increasing. Even in the years 2001-2002 after the internet bubble crashed. granted, they didn't grow as hard as before or after but there was growth none the less.

I think that in a worst case scenario sales will stagnate, though a slight increase sounds more reasonable, just a bit lower then expected.

Seeing threads like this of people complaining about $4 per gallon (try $8-9 in England) makes me realise how weak the dollar is in comparison. No wonder console manufacturers are complaining about low profits.

That depends... The US dollar is very weak, which will probably stop any price cuts from happening. Oil prices seem to be going up rather than down, especially if geopolitical tensions get worse. Inflation is still rising, which will make people more stingy.

However, it's unclear what impact this could have in the gaming market. It could well have an impact, especially on the more expensive consoles and associated hardware (expensive HDTVs for example).

If unemployment starts rising massively as you said, then the shit really hits the fan and the recession can turn into a real problem, like a depression.

This will have to be one of those wait and see things, the number of involved factors is mind-boggling.