Time to stop taking the economy for granted.
That smooth-running jobs machine may be starting to sputter. Big quarterly improvements, economists now say, may be relegated to history. Instead, unemployment may start to tick up, booming exports sales will slow, and business will start to ratchet down its optimism.
One forerunner of this shift may have arrived Friday when the Commerce Department revised downward its estimate of fourth-quarter gross domestic product (GDP), the sum total of the nation's output of goods and services, from an earlier estimate of a 4.3 percent annual rate to a 3.9 percent rate.
Economists quickly pointed to the main reason for the revision: a drop in export growth and a spurt in imports. Many exports are expected to sit in the warehouse because of the financial flux in Asia.
"Thematically what happened is exactly what we expected, but in terms of magnitude the revisions were huge," says Bob Brusca, chief economist at Nikko Securities Co. in New York.
As this trade shift continues, economists expect the United States economy will continue to moderate its growth. The big issue is how quickly it will show up.
"The evidence from the Pacific rim is rather scattered - the fingerprints are there but you have to dust for them," says Mr. Brusca.
Some of the more pessimistic forecasters believe the economy is now hitting the brakes. Merrill Lynch & Co. forecasts the first-quarter GDP annual growth rate will be cut in half to less than 2 percent.
"The US economy is about to slow sharply," warns Cheryl Katz, a senior Merrill Lynch economist in New York.
Aside from the export slowdown, Merrill bases its forecast on high inventory levels. These may indicate business has overestimated consumer demand. If so, companies will begin to scale back production. Merrill is predicting a 10 percent reduction in consumer spending this year.
Some other economists figure the slowdown will be more gradual and won't take place until this spring or summer.
"We started the year on a roll," says Robert Dederick, a consulting economist at Northern Trust Co. in Chicago. "It seems to me the consumer is out buying and the housing market is vibrant."
Like many economists, Mr. Dederick downplays the inventory reports as hard to decipher. Instead, he expects the first quarter GDP to come in at a 3 percent annual rate.
Although some early year statistics hint at a slowdown, economists will get their first chance to confirm this trend Friday when the Labor Department reports the February employment news. In the past several months, the economy has been adding jobs at well over 300,000 per month.
"We do look for a moderation in employment," says Ms. Katz.
If the job data confirm a slowdown, that will reinforce Federal Reserve Chairman Alan Greenspan's decision to not raise interest rates. In testimony to Congress last week, Mr. Greenspan said the Fed would remain on the sidelines until it gets a better idea of the impact of the Asian crisis.
Most economists expect the Asian turmoil to slice from 0.5 to 1 percentage point from the US economy.
"The Fed will be on the sidelines for a long time," predicts Donald Ratajczak, an economist at the Georgia State University's Economic Forecasting Center in Atlanta.
From an inflation standpoint, there appears to be little reason for the Fed to be worried. The Commerce Department said the GDP inflation measures showed prices rising at only a 1.4 percent annual rate in the fourth quarter. Economists had expected a 2 percent rise.
In the next few months, Americans may start to pay more for produce. Heavy rain from the El Nio weather effect has damaged produce in both California and Florida.