Washington, In the midst of the global financial crisis, an influential US daily has raised the spectre of major producers like China and India dumping products in world markets and giving America another worry - deflation, or declining prices.

"As dozens of countries slip deeper into financial distress, a new threat may be gathering force within the American economy - the prospect that goods will pile up waiting for buyers and prices will fall, suffocating fresh investment and worsening joblessness for months or even years," the New York Times said Saturday.

"The word for this is deflation, or declining prices, a term that gives economists chills," it said noting, "Deflation accompanied the Depression of the 1930s."

Persistently falling prices also were at the heart of Japan's so-called lost decade after the catastrophic collapse of its real estate bubble at the end of the 1980s - a period in which some experts now find parallels to the American predicament.

"That certainly is the snapshot of the risk I see," Robert J. Barbera, chief economist at the research and trading firm ITG was quoted as saying by the Times. "It is the crisis we face."

In past crises, like those that devastated Mexico in 1994 and much of Asia in 1997 and 1998, weak economies managed to recover by exporting aggressively, not least to the United States, the New York Times said.

But American consumers are battered this time. After years of borrowing against homes and tapping credit cards, consumers are pulling back, it said.

"From Asia to Latin America, exports are slowing and should continue to do so as the global appetite shrinks," the Times said.

"This is spawning fears that major producers like China and India - which vastly expanded production capacity in recent years - will have to dump products on world markets to keep factories running and stave off unemployment, pressing prices lower."

Earlier this year, some analysts suggested that American businesses might continue to prosper, even as consumers pulled back at home, by selling into foreign markets. But as much of the planet now struggles, they are worried, the Times said.

China has long been at the centre of claims that the world could keep growing regardless of American troubles. China has been importing cotton from India and the United States; electronics components from South Korea, Malaysia and Taiwan; timber from Russia and Africa; and oil from the Middle East, the Times said.

But many of the finished goods China produces with these materials have ultimately landed in the United States, Europe and Japan. When consumers pull back in those countries, Chinese factories feel the impact, along with their suppliers around the globe.

Now, a glut of products may be building in the United States. Orders for trucks used by business have plummeted. Investments in industrial equipment are declining. Yet inventories have grown, it said.

"I worry about an economy that looks like Japan," the Times quoted Barry P. Bosworth, a senior fellow at the Brookings Institution, as saying. "We're going to be struggling with how to put this back together again for several more years."

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