Nigel Gault, chief U.S. economist at Global Insight, is looking for the deficit to narrow slightly to $62.0 billion, forecasting that both exports and imports will be lower in March than in February.

On the import front, he said the price of oil is pushing the price of imports up but pushing the volume down. In addition, there was a surprisingly high volume of imports in February, particularly of capital goods, consumer goods and autos, he said.

This contributed to the unexpected widening of the deficit to $62.3 billion in February from January's $59.0 billion. February's total exports of goods and services came in at $151.35 billion, an increase of $2.9 billion from January, while imports came in at $213.67 billion, an advance of $6.3 billion from the prior month.

On the export side, Gault said production was being cut back in March, in part because of a decrease in auto production, as well as a reduction in trade flows between Canada and the U.S.

He also said the Commerce Department had estimated a large decline in aircraft exports when they compiled the advance GDP report from last week, another reason to expect weakening exports from February. In the broader story, however, Gault said exports remain healthy.

Of the 71 economists polled by Bloomberg, the range of expectations for the trade deficit range from a low of $59.0 billion to a high of $64.9 billion.

Meny Grauman, economist from CIBC World Markets, said his outlook for the U.S. economy is "decidedly negative over the next two quarters, but a bright light continues to be the improving American trade position." He said exports boosted real GDP by over 1% in the final quarter of 2007 and another 0.22% in Q1 2008, a number that could be pushed up by the trade data.

"Our at-consensus call should not be market moving, but an improving U.S. trade position will continue to highlight one of the particularly bright areas of the economic outlook. It also further raises the chances that this current slowdown will be relatively mild," he said.

A less optimistic view comes from economists at Desjardins, who said import prices climbed 2.8% in March, while growth in export prices was a little slower at 1.5%. This implies the deficit could climb to $64.0 billion, its worst level since the summer of 2006, they said.

Economists from Bear Stearns said the advance release of first-quarter GDP assumed a $400 million narrowing in the goods trade deficit in March, but although March imports will likely be boosted by a price-related increase in petroleum imports, they expect imports to moderate and the deficit to come in at $61.0 billion.

"Over the course of the next few months . . . the trade deficit will likely begin to widen again since the tax rebate checks (which began to hit bank accounts this week) should cause a pickup in import growth," they added.

Economists from BBVA said exports continue to increase at a faster rate than imports, adding significant support to GDP growth and offsetting the sluggish domestic front.

"From February 2007 to February 2008, real exports have outpaced the rest of the economy, growing by an average year-over-year rate of 8.5%. This was the result of a robust growth overseas and a weak exchange rate. In the same period imports expanded only 1.9%," they said.

By Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, This email address is being protected from spam bots, you need Javascript enabled to view it