May 23 (Bloomberg) -- U.S. motorists, who are paying record prices for gasoline, drove 4.3 percent less in March for the biggest monthly drop ever, a government estimate showed.

The decline in vehicle miles traveled was the first for March since 1979, when Iran cut oil exports, the Federal Highway Administration said today in a statement. Gasoline at U.S. pumps rose to as high as $3.29 a gallon during the month, according to motoring group AAA. The price rose to $3.88 yesterday.

The 11 billion-mile falloff underscores concern among economists that fuel costs and a drop in home prices will damp household spending, which accounts for about 70 percent of the U.S. economy. The rise in gasoline is overwhelming efforts to save money by driving less, said Nigel Gault, chief U.S. economist at Global Insight Inc.

``The simple fact is that they can't reduce their miles enough to fully offset the higher cost of the gasoline,'' Gault, chief U.S. economist at the Lexington, Massachusetts-based firm, said in an interview. ``They'll buy less gasoline, but it means that they're buying less of everything else too.''

The government has produced the report monthly since 1942.

The Washington highway agency uses cables across roadways to estimate the number of miles driven. It tracks all kinds of motorized vehicles and doesn't differentiate between commercial and passenger traffic, spokesman Doug Hecox said.

The biggest percentage drop in miles traveled was 6.1 percent in the south Gulf region, which consists of Texas and seven other states. Miles driven in California and the 12 other states that make up the western region declined the least, at 2.2 percent.

Tennessee reported an 8.6 percent decrease, the biggest of all states. Mileage in Hawaii rose 1.9 percent for the sole increase.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

Last Updated: May 23, 2008 15:30 EDT