Growth and economic well-being: OECD household income grows slightly in the third quarter of 2020 despite GDP rebound

Real household income per capita, which provides a better picture of changes in people’s economic well-being, rose by only 0.6% in the OECD area in the third quarter of 2020, despite a sharp 9.1% rise in real GDP per capita. Reduced growth in household income for the OECD area as a whole was largely due to marked decreases in income levels in the United States (-4.2%) and Canada (-3.6%). In most OECD countries, however, the rebound of real GDP per capita in the third quarter of 2020 helped lift household income.

The strong growth in household income in Italy (6.4%), the United Kingdom (5.1%), Germany (4.3%) and France (3.5%) followed consecutive falls in the first and second quarters of 2020 in all four countries. The third quarter increases in income reflected, to a certain extent, the strong growth in GDP per capita in France (18.4%), Italy (16.1%), the United Kingdom (15.9%) and Germany (8.5%)

The fall in household income in the United States and Canada followed marked, but short term, increases of 10.5% and 11.2% respectively in the second quarter, predominantly due to large government transfers to households. The relatively sharp declines in the second quarter along with the strong rebounds for the other Major Seven economies are examples of the high volatility currently being experienced in aggregate levels of household income in many countries as governments’ fiscal policy responses to the crisis vary in their levels of support and duration.

To remove some of the volatility, it is worthwhile to look at the cumulative growth of the measures over the first three quarters of 2020. Across the Major Seven economies, cumulative growth in household income was either strongly positive or only slightly negative, despite strong cumulative falls in real GDP per capita for each Major seven economy, ranging from a decline of (minus) 3.8% in the United States to (minus) 5.9% in Canada.

Across the OECD area, Chile reported the largest cumulative increase in real household income per capita (29.7%), driven by the introduction of policies allowing households immediate access to pension funds during the third quarter of 20201 . Canada (7.9%), Australia (6.9%), the United States (6.5%), Netherlands (4.5%) and Poland (3.6%) also recorded high accumulated growth in household incomes over the course of 2020, despite declines in their cumulative GDP, as shown in the previously released G20 GDP growth, news release.

OECD

Tags: OECD, экономика