Growth in real household income per capita, which provides a better picture of changes in households’ economic well-being than real GDP growth per capita, was stable at 0.5 % in the OECD area in the second quarter of 2019, outpacing real GDP growth per capita for the third straight quarter.
In Canada, growth in real household income per capita was stable at 0.3 % in the second quarter of 2019 while real GDP per capita growth accelerated to 0.6 % (from minus 0.1 % in the first quarter of 2019).
In Italy and the United Kingdom, real household income per capita growth picked up markedly in the second quarter of 2019 to 0.8 % and 0.7 %, respectively (from 0.0 % and minus 0.2 %, respectively in the first quarter). Real household income per capita also picked up in Germany, by 0.4 % (from 0.2 % in the first quarter of 2019). Growth in real GDP per capita slowed in Italy to 0.1 % (compared with 0.2 % in the previous quarter), in the United Kingdom to minus 0.4 % (compared with 0.4 % in the first quarter of 2019) and in Germany, to minus 0.1 % (from 0.3 % in the previous quarter).
In France, real household income per capita growth decelerated markedly in the second quarter of 2019 to minus 0.3 % (from 0.7% in the first quarter), while real GDP per capita growth picked up slightly to 0.3 % (compared with 0.2 % in the previous quarter). Growth in real household income per capita also slowed, to 0.5 % in both the United States and the euro area (from 0.9 % and 0.6 %, respectively in the previous quarter) while real GDP per capita growth decelerated to 0.4 % and 0.1 % , respectively (from 0.6% and 0.4%, respectively in the first quarter of 2019).
Over the last two years, in the OECD as a whole, growth in real household income per capita has outpaced growth in real GDP per capita by 0.8 percentage point. Growth in real household income per capita outpaced growth in real GDP per capita in all Major Seven economies, except France. The gap was largest in the United Kingdom and the United States (both 1.6 percentage point).
Over a longer period however, since the first quarter of 2010, real GDP per capita growth has outpaced real household income per capita growth in most Major Seven economies, with France showing the highest gap (5.4 percentage points). In the United States, growth in real household income per capita has outpaced growth in real GDP per capita by 5.1 percentage points.
Growth in real GDP per capita has outpaced growth in household income per capita in many OECD countries since 2010 Percentage points difference in cumulative growth rates of real household income per capita and GDP per capita.
Technical notes for OECD Growth and economic well-being News Release
A key indicator of households’ material conditions, or economic well-being, is per capita household income, after deducting taxes and social contributions and including social benefits. It provides a better gauge than gross domestic product (GDP) of the resources households have at their disposal to buy goods and services or save for the future.
Over the very long term the average annual growth rates of the two statistics tend to be similar, since the incomes earned by households account for a large share of the total income generated through production in the economy, as recorded by GDP. However, over shorter time periods, especially during severe economic recessions or rapid expansions, trends in household disposable income and GDP may differ significantly. Many factors can contribute to such a divergence; for instance, changes in the government’s policies related to taxes or social benefits, or in how companies allocate their earnings between dividends, retained earnings and compensation of employees.
Definition of the indicators:
Real GDP per capita
Gross domestic product (GDP) is the standard measure of the value added generated through the production of goods and services in a country during a certain period. Equivalently, it measures the income earned from that production, or the total amount spent on final goods and services (less imports). While GDP is the single most important indicator to capture these economic activities, it falls short of providing a suitable measure of people’s material well-being.
Real GDP per capita shows GDP, adjusted for inflation by the GDP deflator, per member of the population.
Real household disposable income per capita
Household disposable income equals the total income received, after deduction of taxes on income and wealth and social contributions, and includes monetary social benefits (such as unemployment benefits). It does not include in-kind transfers, such as those related to health and education provided free or at economically insignificant prices by government.
Household disposable income may be used either for final consumption or saving. Disposable income thus represents the maximum amount households can consume without reducing their net wealth (without taking into account holding gains or losses on assets).
Real household income per capita shows household disposable income, adjusted for inflation in household final consumption, per member of the population. Note that households in this release include households and non-profit institutions serving households (e.g. non-profit sports membership clubs) as these cannot be separately identified across all countries.
Because the composition of GDP and household final consumption differs, the evolution of deflators for these two measures can differ, sometimes significantly, particularly in resource rich and export intensive economies. The GDP deflator, for example, includes price changes in exports unlike the deflator for household final consumption which includes only the aggregate price of consumer goods and services acquired by households.
The statistical data in this publication are supplied by and under the responsibility of the relevant statistical authorities. The use of such data by the OECD is without prejudice to the status of or sovereignty over any territory, or to the delimitation of international frontiers and boundaries.
Japan – Household income is currently compiled and provided by the national statistical authority only once a year. Therefore, it is not available for the most recent quarters.
The estimation method to compile the OECD-total and the Major Seven aggregates is available in the methodological note (see below).
Further methodological information can be downloaded from: