WASHINGTON (AP) — The economy grew at a slightly slower pace last year than previously believed, but Americans' saving rate was a lot higher, thanks to a flood of previously unreported income.
Those are some of the findings in the government's latest comprehensive revision of its report on the gross domestic product — the country's total output of goods and services.
The government each year revises the GDP figures back for three years. But every five years, it conducts a "comprehensive update," which takes a look at GDP figures back to 1929 when the annual figures began.
The biggest change in the new report is that proprietors' income — the earnings reported to the Internal Revenue Service by proprietors and partnerships — was under-reported, according to new IRS data. The adjustments helped boost income by $401.9 billion, or 2.4 percent, in 2017 and $196.4 billion in 2016 and $166.7 billion in 2015.
Those changes were enough to lift the saving rate significantly to 6.7 percent in 2017, up from 3.4 percent, and 6.7 percent in 2016, up from 4.9 percent.
The overall GDP growth rate stands at 2.2 percent, down from 2.3 percent previously reported, with similar slight changes to years before that.
There were bigger adjustments to some of the quarterly growth rates, in part because the government has been trying to correct faulty seasonal adjustments of the figures, which has tended to depress growth in the first quarter of each year.
For 2017, first quarter growth was revised up to an annual rate of 1.8 percent, compared to the 1.2 percent previously reported. Growth in the first quarter of 2016 climbed 1.5 percent, more than double the 0.6 percent previously reported.
The comprehensive update showed that even with all the changes, the current economic recovery, which began in June of 2009, is still the slowest in the post-World War II period. The average annual growth rate during this expansion has been 2.2 percent, unchanged from previous estimates.
The economy grew at an average annual rate of 2.9 percent in the previous expansion, which lasted from the fourth quarter of 2001 to the fourth quarter of 2007. That marked a small increase from the previous estimate of 2.8 percent annual growth.
The average annual GDP growth rate from 1929 through 2012 was unchanged at 3.2 percent.