Household income in the OECD area fell sharply in the second quarter of 2021, despite strong growth in GDP

Real household income per capita fell by 3.8 % in the OECD area in the second quarter of 2021 following growth of 5.2 % in the first quarter. The fall was driven by a sharp drop in household income in the United States, as fiscal support provided by the government during the COVID-19 pandemic began to be withdrawn. The decline in real household income per capita occurred despite the rise of 1.6 % in GDP per capita across the OECD area in the second quarter of 2021, which included increases in GDP per capita in all but three OECD countries.

Real household income per capita and real GDP per capita 

Percentage change on the previous quarter, seasonally adjusted data

Among the major seven economies excluding Japan, for which 2021 quarterly estimates are not yet available (see Country notes), real household income per capita rose most in Canada, up by 1.4 % in the second quarter of 2021, despite a decline of 0.5 % in GDP per capita. Real household income per capita also grew in France (up by 0.6 %) and Germany (0.2 %). By contrast, real household income per capita fell sharply in the United States (minus 8.3 %). This drop followed an increase of 11.2 % in the United States in the first quarter of 2021 when large-scale, pandemic-related monetary transfers were made to households.

Across other OECD countries, the strongest growth in real household income per capita in the second quarter of 2021 was in Chile (22.1 %), reflecting the government’s policy of giving people early access to their pensions. Increases were also observed in Slovenia (6.2  %), Austria (2.1%), Belgium (1.9 %) and Norway (1.7 %). On the other hand, real household income per capita fell in Greece (minus 4.0 %), Hungary (minus 2.7 %), the Netherlands (minus 2.1 %) and Spain (minus 1.2 %).

From a longer-term perspective, fiscal stimulus in the United States, including the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 and the American Rescue Plan Act of 2021, has resulted in strong household income growth relative to GDP growth throughout the pandemic. The large size of the fiscal stimulus has made the United States a key contributor to household income growth for the OECD area. When the contribution from the United States is excluded, real household income per capita has still grown since the onset of the pandemic, but growth has been both smoother and more restrained, maintaining its long-term trend despite a fall in GDP per capita.

In the OECD area, real GDP per capita in the second quarter of 2021 remained below its level in the fourth quarter of 2019, before the start of the COVID-19 pandemic. By contrast, real household income per capita exceeded this level by 3.6 %. Over this period, the strongest growth in real household income per capita was in Canada, at 9.4 %. The United States also saw strong growth in real household income per capita (6.2 %) and was the only one of the major seven economies to experience an increase in real GDP per capita over this period. Over the course of the pandemic, real household income per capita has changed less than GDP per capita in the other major seven economies (excluding Japan) ranging from a decrease of 2.3 % in the United Kingdom to an increase of 0.7 % in France.

*  See the Methodological note for further details on zone total estimates.

Note: As a consequence of measures put in place by governments to reduce the spread of the Coronavirus (COVID-19), many statistical agencies are facing unprecedented collection, compilation and methodological challenges to develop indicators across a number of domains. To address these challenges, the statistical community is developing guidance, both conceptual and practical, to help ensure the continued delivery of timely and reliable statistics. However, in some cases, there will inevitably be an impact on quality and, as such, the statistics included in this press release may be subject to larger, and more frequent, than normal revisions.

Methodological Notes:

Note that households in this release refer to households and non-profit institutions serving households (e.g. non-profit sports membership clubs).

Further methodological information can be downloaded from:

http://www.oecd.org/sdd/na/QSA_Methodological_Note.pdf