Commerce Department economists made a math error that overstated the amount of consumer spending in May, officials said yesterday.
Consumer spending, a key force keeping the economy afloat, actually rose by 0.3 percent in May not by the 0.5 percent the government reported Monday.
A release by the Commerce Department’s Bureau of Economic Analysis, which compiles the monthly consumer spending and income reports, said the error caused the spending figures to be overstated by $12.3 billion in May, resulting in the incorrect monthly increase of 0.5 percent.
“The error was in [personal consumption expenditures], specifically, estimates of consumer purchases of light trucks,” the government’s release stated.
The mistake didn’t affect the calculation of Americans’ incomes in May, which rose by 0.2 percent.
Given that consumer spending didn’t outpace income growth by as much as the government initially reported, the corrected spending figure did lead to an improvement in the nation’s personal savings rate.
The personal savings rate savings as a percentage of after-tax income in May was a negative 1.1 percent versus the negative 1.3 percent originally reported. In April, the savings rate stood at negative 1 percent.
The savings rate doesn’t give a complete picture of household finances because it doesn’t capture gains from such items as higher real-estate values or financial investments, economists say.
Monday’s consumer spending figure, with other good economic news that day, had made economists more hopeful the country will be able to skirt a recession this year.
After adjusting for inflation, consumer spending rose 0.2 percent in May versus the 0.3 percent increase the government reported Monday.