Rest of world waits to see which way US economy will go

Europe rubs its eyes. What's happening in America?

Factory utilization in the United States has plunged to 70 percent, a seven-year low, but it attracts little attention. Unemployment has jumped above 10 percent, but the stock market soars. It has added $250 billion in paper values since mid--August - that's a quarter of a trillion.

The anxious world watches expectantly. Will America's economy bounce back as hoped and pull the rest of the world after it? For the outsider it's hard to say; Americans seem preoccupied with their midterm election and problems at home.

The fact is that when the American election is over, a host of world problems will be waiting - perhaps the biggest line-up since the end of World War II. The size and urgency of the problems help push governments to attempt solutions now rather than face greater risks. For instance, the European Community suddenly agreed to limit its steel exports to the United States for the next three years. This averts an immediate trade war. But still pending: the question of Japanese automobile exports to the US; the problem of dealing with Mexico's debts, estimated at around $80 billion; the overall riddle of strengthening a world economy that moves on borrowed money.

Economists look at the situation with awe:

* Harvard's Francis M. Bator, in testimony here: ''I believe that the economy is near stalling speed.''

* Walter W. Heller, University of Minnesota: ''We're moving in uncharted waters. Never have we had such a prolonged slump with such high interest rates.''

* Lester C. Thurow, MIT: ''No one country can essentially blow themselves out of this mess based on their own policies . . . they clearly need to be coordinated internationally.''

* Johannes Witteveen, former managing director of the International Monetary Fund, says the recession could turn into a full-fledged depression. He says the risks are higher than at any time in the postwar era.

While statements like this are heard here, the current issue of the respected London Economist banners on the front cover, ''The Crash of 198?'' The magazine asks how Wall Street can manage ''the world's biggest stock market boom during its second biggest peacetime recession?''

Stock market figures are unprecedented. Last Aug. 13 the Dow Jones industrial average stood at 776.92. At the Oct. 20 closing it had risen to 1034.12. This is the highest level since January 1973.

Was the boom due to an upsurge of productivity? Not at all: slowed factories, bankruptcies, and unemployment have been growing.

This week, Commerce Secretary Malcolm Baldrige announced that the gross national product had grown at an annual rate 0.8 percent in the third quarter. This is a relatively weak advance. He described the American economy as going through an ''interim period.'' The hope is that the Federal Reserve Board's relaxation of credit restraints will make it easier to borrow money and start factories producing again.

The Economist cites some of the blows that have struck the world economy recently. In May, the ''Drysdale Government Securities'' organization frightened financiers over the world when it couldn't pay $160 million interest on a bill to Chase Manhattan Bank. In June, the Italian Banco Ambrosiano found itself struggling with obligations amounting to $1.6 billion. In July, in America, the Penn Square Bank of Oklahoma City closed its doors with unpaid syndicated loans, one of which amounted to over $1 billion for Chicago's Continental Illinois bank. In August, Mexico announced that it could no longer meet payments on $80 billion in foreign debts.

A key factor is all this is the change in America's trade relations with the rest of the world. More and more the US is becoming integrated with the world trade: 20 years ago the US exported only 5 percent of its gross national product; now it is 13 percent. Economists remind Congress that one in six US jobs is now tied to foreign trade.