The full import of the Asian economic debacle is still not fully appreciated on Wall Street, some economists warn.

Last week stocks enjoyed a giddy rally Wednesday after the Federal Reserve intervened in currency markets to stabilize the beleaguered Japanese yen.

But propping up the yen, even if successful, will not have any short-run impact on the large and growing U.S. trade deficit, cautioned Ian Shepherdson, chief U.S. economist at HSBC Securities, New York.

He said he expects the monthly trade gap to hit $20 billion by yearend. And that could slow the growth of the nation's gross domestic product to an anemic 1% annual rate, versus the sizzling 4.8% pace of the first quarter.

The Commerce Department said last week that the U.S. goods and services deficit deepened to $14.6 billion in April. That was far larger than the $13 billion that had been expected and means the U.S. economy is almost bound to slow soon.

Mr. Shepherdson pointed out, however, that the damage has so far been done mostly by weaker U.S. exports-down 15% in April from a year earlier. Meanwhile, import growth from the traumatized Asian economies has actually slowed.

That means the widely expected surge of cheaper Asian imports has not yet begun to arrive, probably because manufacturers in the region have lacked financing. "This situation will not last indefinitely," the economist said.

"We remain convinced that Wall Street is underestimating the effect of the Asian crisis on the U.S. economy," Mr. Shepherdson said. "The monthly trade deficits routinely exceed expectations.

"The drop in export growth, from last year's 10.2% to a possible zero this year, is big enough alone to reduce GDP growth by 1.25%," he said. "Add in the impending import hit, and it is not too difficult to imagine a net Asia effect of close to 2%.

But the Wall Street consensus view of the Asian drag on the economy this year still appears to be more like 0.5% to 0.75%, he said.

If the financial markets do not yet grasp the full dimensions of the Asian crisis, the Fed now does, given its "drastic step of intervening to support the yen," Mr. Shepherdson said.

But Bruce Steinberg, chief economist at Merrill Lynch & Co., said he expects the yen to weaken further against the dollar this year, deepening the economic malaise in Japan and elsewhere in Asia.

"Since the dollar's uptrend versus the yen began in March 1995, there have been periodic yen rebounds," he said. "But no rebound has persisted for much more than a month.

"The yen has gone on to plumb new lows after each brief moment of strength," he said. "We expect a similar performance this time around."

Mr. Steinberg noted that the U.S. currency intervention was apparently based on new assurances by Japanese policymakers that they will speed up resolution of bad bank debt and let more banks fail.

"Of course, such promises have been made in the past," he said, noting that the Japanese finance minister has since come out against further loan disclosure requirements.

But even if Japan were to take the actions needed to purge its economic system of trouble, the nation's currency and economy would have to get weaker before getting stronger, he said.

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