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AMERICA'S economy is slowing down. The longest period of economic expansion in U.S. peacetime history, roughly eight years, may be coming to an official end -- if it hasn't ended already. Along with that have come early signs of lower prices that could spread.

Deflation is nowhere more evident than in real estate, where recession reigns. The median price of homes nationally has dipped 6 percent since mid-year. Commercial prices are off, according to some observers, by 5 to 10 percent.

But lower prices can be detected in other commodities, like steel and aluminum, as well. Furniture prices are off 3 percent from a year ago. Kitchen appliances and some textile products are cheaper. Rebates to stimulate auto sales sometimes more than offset official announced price increases.

One reason more consumers haven't noticed this quiet development is that fuel prices, including gas at the pump, have jumped through the roof since the Persian Gulf crisis flared last August. Another reason is that costs of some other items like medical care, legal services and university tuitions continue to rise.

Leave aside the energy price bubble, though, and the consumer price index rose a modest 3.9 percent as an annual rate over the last three months.

Slowing inflation rates and lower prices bring with them many advantages. Deflation keeps the worth of the dollar, its actual buying power, strong. It protects the savings of people on fixed incomes.

But a slowing economy can also feed on itself, boosting jobless rates, reducing personal income and crippling business at a time when individuals, businesses and the government are striving to meet huge debt payments. The normal dangers of recession are magnified by any large overload of debt. Failures to repay in full or on time or, worse yet, at all, weaken debtors and creditors alike. Debt difficulties could spread across the country like falling dominoes.

No doubt these glum possibilities figured into the wise recent decision of the Federal Reserve Board, the nation's central bank, to stimulate the economy. It wants lower interest rates, a decision that signaled a change in the Fed's top priorities from fighting inflation to avoiding recession.

After so many bouts with inflation, the prospect of lower prices, of deflation, can look attractive. To a degree it is. Especially for overbought Christmas shoppers. But deflation doesn't look attractive to those in debt, and they are legion today. Lower prices can quickly become too much of a good thing, as happened in the Great Depression when prices fell by up to 11 percent a year.

With America's economic and social safety nets in place now, a repetition of that is most unlikely. Even so, the goal for a healthy economy and for government policy fostering that health must be balance. Things shouldn't go too far one way or another. Balance keys stable growth. Today it is a balance that must strive for middle-road growth while trying to avoid the extremes of inflation, burgeoning debt -- or even deflation.

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