WASHINGTON -- The huge jump reported yesterday in the trade deficit in March reinforced analysts' predictions of a weaker U.S. trade picture this year that will hold back growth.

Reaching the highest level in almost four years, the U.S. merchandise trade balance in March surged 29.1% to $10.2 billion, the Commerce Department reported. U.S. exports gained 5.6% during the month to $39 billion, but imports advanced 9.7% to a record-high of $49.2 billion, the department said.

"The trade situation this year will be worse than last year. That's almost inevitable," said David Kelly, senior economist of the Boston Co. "That will hold growth back."

Economists generally expect the U.S. trade deficit to widen this year as the U.S. economy continues to grow faster than the economies of its major trading partners.

The gain in the March deficit was bigger than expected. Analysts had expected the March deficit to land in the $7.5 billion to $8 billion range, following a $7.2 billion deficit in February that was revised up to $7.9 billion yesterday by the department.

Economists said the jump in the trade deficit was somewhat of an aberration because imports will not keep increasing at the rate they did in March.

Kelly said that much of the gain in imports probably resulted from U.S. retailers restocking their shelves with foreign goods. And the rest of the increase in imports resulted from stronger demand by American consumers, he said.

"There's an interesting competition going on between inventories and the trade balance," said Alan Gayle, senior vice president of the Capitoline Investment Service.

Gayle said that the large March trade deficit by itself would depress the gross domestic product estimate for the first quarter. But he said that the pressure may be offset by larger-than-expected gains in business inventories.

Commerce Secretary Ronald Brown yesterday noted that March imports were affected by inventory gains.

"Given the strong evidence that much of this increase went into inventories, which rose rapidly during that month, there is reason to believe that this surge in imports was a one-month deviation from more moderate trends," Brown said.

The U.S. trade deficit with Japan surged 27.5% in March to $5.3 billion, the department reported. Brown indicated that the Clinton administration might support a lower U.S. dollar to reduce the deficit.

"We must correct this imbalance using the three tools at our disposal -- prompt fiscal stimulus in Japan, market-driven exchange rate corrections, and negotiations that remove structural barriers to improved trade between our nations," Brown said in a prepared statement.

Marco Babic, an economist with Evans Economic Inc. in Washington, D.C., said he expects a small downward revision to first-quarter GDP, to perhaps a gain of 1.6%, because the trade deficit widened so much in March.

Stronger U.S. demand for foreign goods is not necessarily bad news because it shows that American consumers want to spend more of their money, Babic noted.

"The U.S. economy is leading the world economy, so I tend to think the trade deficit will continue to grow this year," Babic said.

The United States has racked up a $25.8 billion trade deficit in the first three months of this year, up a whopping 72.7% from the $14.9 billiondeficit in the same period last year, the department reported.

In general, economists said they expect this year's total trade deficit to be significantly greater than last year's, but probably not by 72%. Kelly said he expected a 15% gain this year, but that yesterday's report implies it may be bigger.

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