WASHINGTON

                   Even after considering the ill effects of Asia's travails, the average forecast
                   of 55 economists surveyed recently by The Wall Street Journal is that the
                   U.S. economy will expand 2.25% this year. And even after marking down
                   its forecast, the International Monetary Fund still sees industrial countries
                   growing 2.4%.

                   But when economists begin moving their forecasts down, they usually don't
                   move them down enough at first. More pessimistic revisions are likely.
                   Already, nearly one in three of the economists in this newspaper's survey
                   expects U.S. growth this year of less than 2%. The IMF says "a
                   substantially more pronounced and prolonged" Asian crisis could reduce
                   industrial-nation growth to 1.6% in 1998.

                   Economists aren't good at seeing the big shifts. As Victor Zarnowitz, a
                   business-cycle scholar, puts it: "The very occurrence of a recession is an
                   unsolved puzzle. There is no generally accepted explanation of why a
                   normally well-functioning economy of a country with growing population and
                   other productive resources should repeatedly suffer overall declines in
                   employment, production, real income and sales."

                   So it is useful to ponder the questions on which the outlook turns:
                   Have the struggling countries of Asia touched bottom? Is Japan
                   finally doing what is needed to restore growth? Is Europe on the
                   verge of a welcome growth spurt? Can the U.S. sustain another year
                   of economic nirvana of low inflation, low unemployment and rising
                   stock prices?

                   "It's not at all clear that we can count on an unambiguous yes in all cases,"
                   says Rudi Dornbusch, an economist at Massachusetts Institute of
                   Technology.

                   Only the fearless, and government officials who hope their prophecies are
                   self-fulfilling, declare the Asian crisis at an end. Whatever is causing the
                   plunge in Asian currencies, the results will be severe: Banks and companies
                   that borrowed dollars can't pay them back. Creditors may have to be patient,
                   but the borrowers and their workers will be squeezed. Bank failures and
                   corporate bankruptcies won't bolster anyone's confidence. With less foreign
                   money flowing in, Asians will have less to spend and invest. The slump will
                   have "devastating effects on the self-confidence of people who have
                   enjoyed nearly a decade of robust economic growth," warns economist
                   David Hale of Zurich Kemper Insurance.

                   Japan's persistent woes both compound the rest of Asia's difficulties and
                   reflect its dependence on the now-troubled economies. IMF figures show
                   that more than 40% of Japan's exports go to Asia's developing countries,
                   few of which will be promising markets this year. But so far, Japan hasn't
                   stimulated demand at home. Salomon Smith Barney economists note that
                   Japan's performance in the 1990s is "virtually a mirror image" of the U.S.:
                   slower productivity growth, wider budget deficits, more joblessness, lower
                   stock prices and weaker banks. Signs that the Japanese government isn't
                   any longer in denial are welcome in Washington, but there is much
                   skepticism.

                   The best face IMF chief economist Michael Mussa could put on
                   Japan the other day was: "There certainly are risks on the
                   downside, but there's a little bit of potential on the upside as well."
                   And he is one of the optimists.

                                        Europe could be the good-news surprise. The
                                        drag from reducing budget deficits is largely
                                        over. European companies are going through
                                        something like the restructuring of U.S.
                                        companies in the 1980s. Monetary union could
                                        help. It "will make Europe feel good and it
                                        definitely will create a boom in Italy and Spain,
                                        where [interest] rates will fall dramatically,"
                   says MIT's Mr. Dornbusch.

                   In the U.S., the current combination of macroeconomic factors is so
                   unusually favorable that Mr. Dornbusch says "we don't even have a name
                   for it." The inflation scare is fading; the expected slowdown in exports
                   seems to have substituted for a Federal Reserve interest-rate increase,
                   braking the economy before it could really overheat. Domestic momentum is
                   still so strong that the economy could keep expanding comfortably (if more
                   slowly) through 1998. One big risk is a confidence-shattering stock-market
                   plunge, perhaps triggered by more bad news about profits. "Rapid
                   asset-price declines -- in equity and real estate, especially" can be "a
                   virulently negative force in the economy," Fed Chairman Alan Greenspan
                   cautioned over the weekend.

                   The U.S. is fortunate: The budget is near balance, the Fed has room to
                   maneuver, inflation is calm, companies are competitive, banks are sound,
                   productivity and wages are turning up. But if Europe, Japan and the rest of
                   Asia all falter in 1998, the U.S. will find it tough to keep sprinting along.

                                                           -- DAVID WESSEL