Asian pain has yet to hit.

One economist who makes a strong case for a real economic slowdown in the second half of this year is Stephen Slifer of Lehman Bros. Inc.

The trade deficit is ballooning, Slifer says, and inventories are building up fast. Put those two things together, and it makes a slowdown likely.

“You Ain’t Seen Nothin’ Yet” is the title of a May 22 report by Slifer and his colleagues Ethan S. Harris, Joseph T. Abate and Joel S. Kent. The title refers to the impact of the Asian economic crisis on the U.S. economy.

U.S. investors became alarmed in October, when most Asian currencies plunged and their stock markets cratered, sending the Dow Jones industrial average reeling for its first 10% tumble since the Saddam Hussein bear market of 1990. But when nothing immediately happened to the U.S. economy, investors breathed a sigh of relief and bid stocks back up to records.

Did they relax too soon? In March, the Lehman economists wrote that “it will take several more months for the shock from Asia to work its way from the traded goods sector, to manufacturing output, income and employment.”

Similarly, in congressional testimony last month, Federal Reserve Board Chairman Alan Greenspan said, “The effects of the Asian crisis on the real economies of the immediately affected countries, as well as our own economy, are only now just being felt.”

How are they being felt? Slifer spells out some of the ways. “Already at a record size, the [trade] deficit set a new record, widening from $12.2 billion in February to $13 billion in March,” he wrote. “Since the Hong Kong stock market crash in October, the trade deficit has widened every month for a cumulative increase of almost 50%.”

Feeling strapped for cash, Asian consumers and companies are cutting back on their purchases of American computer equipment, cars, food and almost everything else. At the same time, the Asian countries are desperate to export. And their fallen currencies make their exports very cheap in the U.S.

Asia accounts for virtually all of the $4-billion worsening of the trade balance since October, Slifer says. He warns, though, that “this is only the beginning of the shock from Asia. . . . We believe that more than half the adjustment is still to come.”

The buildup of inventories in the U.S. is a second brake on the economy, the Lehman crew says. The domestic U.S. economy looked very strong in this year’s first quarter, up about 4.8% from the first quarter of 1997. However, much of the gain was due to companies building up their inventories.

“The surge in inventory investment virtually assures slower GDP growth in the second quarter,” the Lehman economists wrote. “At $95 billion, first-quarter inventories are piling up at a record rate and are growing at more than three times their long-term trend.”

It doesn’t take a genius to see that if cars are piling up on dealers’ lots, car sales will slow within months. The same applies to the economy as a whole.

So how does the stock market react if Slifer and his colleagues are right? There are only two ways stocks can go up--if corporations earn higher profits, or if investors are willing to pay a higher price-to-earnings ratio for those profits.

Since most of Wall Street expects corporate profits to rise in the second half, it will come as a rude shock if they fall instead.

Investors are already paying the highest multiple on record, as judged by the P/E on the stocks in the Standard & Poor’s 500 index, which is trackable back to 1926. Could the multiple go still higher? Conceivably, although that would probably require a decline in interest rates. In their March meeting, the Federal Reserve governors said they were leaning toward raising rates, not lowering them.

Slifer avoids spelling out what his concerns mean for corporate profits. But if the U.S. market should get crunched, stocks with high price-to-earnings ratios will probably suffer the most damage. They usually do. These days, that includes not only the speculative technology and biotech names, but such well-known stocks as Gillette Co. (trading at 47 times earnings in the past 12 months), Coca-Cola Co. (50) and Lucent Technologies Inc. (205).

Traditionally, stocks with high dividend yields hold up best during market declines. That means such groups as oil stocks, real estate investment trusts--and stodgy old utilities.