"This is what happens when you sit on your laurels," Martino (pictured), whose team made the World Cup quarter-finals for the first time last year, said after Saturday's defeat.
Paraguay, whose traditional strengths lie in defence, succumbed to three first-half goals - two by striker Javier Hernandez - in Oakland in one of a spate of friendlies in a busy end-of-March programme for national teams from the Americas.
"If we remain satisfied with having been among the top eight (teams) in the world, things will surely go the way they did today (Saturday), but if we use it as a platform to keep progressing we'll do better," Martino told reporters.
"We have only one more commitment before the Copa America. If we don't leave (Oakland) worried it's because we haven't made a good analysis of the match (against Mexico)."
The U.S., overwhelmed by Lionel Messi's Argentina in the first half of their friendly in New Jersey on Saturday, scrambled an equaliser from a set piece.
Costa Rica, having led by two goals, were held 2-2 by China in a friendly to inaugurate the $100 million stadium in San Jose, a gift from the Chinese government in recognition of the central American country's decision five years ago to break off diplomatic relations with Taipei in favour of ties with Beijing.
Chile, following a 1-1 draw away to Portugal in Aveiro on coach Claudio Borghi's debut, face Colombia in The Hague on Tuesday. Colombia go into the match on the back of a 2-0 win over South American neighbours Ecuador in Madrid.
Panama, who hosted January's Copa Centroamericana, in which Honduras beat Costa Rica in the final, overcame Bolivia 2-0 with goals from Colombia-based pair Gabriel Gomez and Luis Renteria on Friday.
