American found in a pretty awful social gathering (3,5)
I believe the answer is:
tea party
'social gathering' is the definition.
(tea party is a kind of social gathering)
'american found in a pretty awful' is the wordplay.
'american' becomes 'a' (common abbreviation - e.g. in organisation names).
'found in' indicates putting letters inside.
'awful' indicates an anagram.
'a'+'pretty'='apretty'
'apretty' with letters rearranged gives 'teparty'.
'a' placed inside 'teparty' is 'TEA-PARTY'.
(Other definitions for tea party that I've seen before include "Afternoon social gathering - Boston had a good one in 1773" , "US political movement" , "Staunch patriots" , "Social occasion (in Boston?)" , "sort of celebration" .)