The economy grew faster during the past three years than had been previously reported, according to statistical revisions issued yesterday by the Commerce Department.
The unexpected growth came about almost entirely because consumers spent more. Business invested less than earlier figures had shown.
The revisions also indicated that Americans saved less of their income in 1984 and 1985, and more in 1986, than previously estimated.
"It is a little disturbing that the downward revision was in the business sector," said Donald H. Straszheim, president and chief economist of Merrill Lynch Economics. "In the last analysis, we need to invest, and invest a good deal, if there is going to be a capital stock that is efficient and competitive."
The annual revisions to the gross national product numbers showed that the economy grew 2.9 percent in 1986 after adjustment for inflation, rather than the 2.5 percent rate originally reported. In 1985, the growth rate was 3 percent instead of 2.7 percent; in 1984, it was 6.8 percent instead of 6.4 percent.
The statistics are revised each year for the previous three years as new information becomes available. For 1985, for example, the department added in the results of the Bureau of the Census' survey of retail sales. For 1984, Commerce technicians revised the growth figures on the basis of corporate tax returns for that year, among other things.
The revisions also incorporate changes in technology and life style. For the first time this year, for instance, the figures included the money consumers spent to rent videocassettes. That added $2.8 billion to the consumption-expenditure category, which totaled $28.9 billion.
The revisions showed the saving rate (the money left over after personal spending is subtracted from personal income) was 6.1 percent in 1984, 0.2 point less than previous estimates. For 1985, it was 4.5 percent, 0.6 point less than before. In 1986, the rate was 4.3 percent, 0.5 point more than before.
The amounts Americans save is an important factor in determining how much money is available for investment.
The higher rates of economic growth registered for the three years came about entirely because so-called personal consumption expenditures were stronger than expected. Americans spent $10.9 billion more on services from the fourth quarter of 1983 to the fourth quarter of 1986 than had been previously estimated, for example. During the same period, they spent $18.6 billion more on durable goods and $5.2 billion more on nondurable goods, for a total increase in personal consumption expenditures of $34.7 billion, or 0.5 percent above the earlier figure.
Most categories of business investment, on the other hand, were lower. Gross private domestic investment in 1985 was 2.9 percent less than the earlier estimate, and in 1986 was 1.8 percent lower. Within that broad category, investment in producers' durable equipment was down 4.4 percent in 1985 and 5.4 percent in 1986, while investment in structures was off 1.5 percent in 1985 and 4.1 percent in 1986.
Commerce Secretary Malcolm Baldrige said he was "surprised" that all the upward strength in the revision came on the consumer side, but added that the changes "were not large enough to shake my faith in the magnificent number-gathering done by Commerce."
Commerce also revised its estimates of inflation during the past three years. As calculated by the fixed-weight price index, prices rose 3.6 percent in 1985 instead of 3.7 percent as earlier reported, and rose 2.7 percent instead of 2.8 percent in 1986. Prices for 1984 did not change, registering an increase of 4 percent.