Officials Correct Error in Personal Income Growth

The Commerce Department said Thursday that it made a mistake in calculating Americans’ personal income in March. Income went up, though not as much as the government had said.

Personal income, which includes government payments as well as wages, rose by 0.5% in March from the previous month, the department’s Bureau of Economic Analysis now says. On Monday, the government put the increase at 0.8%.

The mistake involved the treatment of payments related to the new Medicare prescription drug plan.

The payments had the effect of boosting overall income for March and should not have been included in the March report.

They are supposed to be logged for April, the bureau said.

The mistake did not affect the calculation of gross domestic product for the January-to-March quarter. GDP -- the value of all goods and services produced in the United States -- rose at a 4.8% pace in the first quarter, the best showing in 2 1/2 years.

Economists said the new income figure did not alter their assessment of where the economy was heading. Analysts expect growth to slow to about 3% -- still a healthy pace -- in the April-to-June quarter.

Income growth is the power of future spending by consumers.

“A 0.5% increase in incomes is still a strong pace and should fuel spending down the road,” said Richard Yamarone, an economist at Argus Research.

In March, consumer spending rose by 0.6%, the government reported Monday. That marked an improvement from February’s 0.2% increase. The bureau’s mistake did not affect its estimates on spending.