SHOULD THE U.S. and global economies experience a hard landing, the reasons will be many, but will undoubtedly include instability from overseas markets.

How could the economy slow so dramatically, particularly in light of generally positive economic news? U.S. jobless rates are at their lowest levels since the late 1960s. The Bay Area unemployment rate this year has been less than 4 percent, its lowest in nine years. Given this, can events overseas bring down our economy?

While it is unlikely that events overseas will draw the United States into a deep recession, they undoubtedly will slow the economy further. These events come at a time when the U.S., California and Bay Area economies are more dependent on overseas markets. They also are occurring along with changes in investor expectations, which further exacerbate the slowdown. Many investors had bought into the notion that we are in a new economic era, where global economic properity is the mantra and recessions don't exist.

During the past two weeks, investors have focused on economic problems in Russia but the most serious issues are political. In particular, investors fear that the Duma may push successfully for a return to state control of industries and prices, and to closing the Russian economy to foreign investment. Investors also fear that Russia will raise its money supply by printing more rubles, prompting a return of inflation.

Unlike Russia, Asia's problems are primarily economic. Japan's economy, in a multiyear slide, may contract slightly this year. Japan's financial system, led by banks that have invested poorly, is unstable. And despite recent political changes, it remains unclear whether Japanese leaders will reform the nation's banking system or take other steps to grow the economy.

Outside Asia, the economies of resource-rich countries like Canada, Australia and Venezuela are slowing because of falling commodity prices. Finally, political risks are increasing in several areas, from Iraqi defiance in the Middle East to missile tests by North Korea. The U.S. and California economies have responded unfavorably to these events for two key reasons. First, exports are now about 12 percent of U.S. gross domestic product, compared with less than 10 percent in 1990 and about 8 percent in 1988. The export share for California is about 15 percent, while it is near 20 percent for the Bay Area.

About one-third of all U.S exports go to Asia (about one-half of California's exports go to Asia), with 9 percent to Japan. The Bay Area's reliance on Asian exports explains the nearly 10 percent drop in exports through San Francisco since 1996. Exports to Russia are very small, about 0.6 percent of the total, but investors view Russia as a potentially large market.

In addition, capital investment in emerging markets has increased tenfold from late '80s levels. As investors scramble to cover losses in one market, they create losses in others by the so-called "contagion effect." In the end, what occurs in overseas markets could have a negative effect on the U.S. and California economies, but the effects are small compared to the influence of U.S. consumers, who still account for two-thirds of the U.S. economy. Today's problems in overseas markets alone cannot tip the United States into a deep recession, but they could be one of several events that collectively bring the U.S. economy back down to earth.