U.S. Counts Cost of Asia Crisis

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Asia's crisis is hobbling the U.S. economy, but it's a slow-acting poison. The U.S. today announced a record $14.5 billion trade deficit for April -- but by now the situation is probably even worse. "Unless Asia recovers and starts buying U.S. exports again, U.S. growth for the rest of the year will probably be wiped out, with serious repercussions for our economy," says TIME reporter Bernard Baumohl. Even more serious than the trade deficit is the $47.2 billion all-time high in the current account deficit -- the indicator of the amount America has to borrow from overseas. Baumohl warns that the record current account deficit represents a serious threat to the long-term health of the dollar.

The figures underline the importance of yesterday's U.S. intervention to boost the yen -- further devaluations in Asia would swell the already bloated deficit. Some relief may eventually come from Europe, however: "If Europe's economies keep bouncing back, their increased demand for U.S. exports will offset some of the losses in Asia," says Baumohl. Until then, it's going to be a rough ride.