Real household income grows for the fourth quarter in a row

Real household income per capita in the OECD rose for the fourth quarter in a row, up by 0.5% in the second quarter of 2023, while real GDP per capita grew by 0.4%(Figure 1). However, the pace of growth of real household income per capita slowed in Q2 2023 compared with Q1, when a 1.4% rise was recorded.[1]

Despite the overall increase in real household income per capita, the picture was mixed across OECD countries. Of the 21 countries for which data is available, 11 recorded an increase in Q2 2023, while ten recorded a fall. Among G7 economies, real household income per capita rose in all countries for which data is available, except Italy. Canada experienced the largest increase in real household income per capita (1.2%), driven by growth in remuneration of employees and the self-employed[2], which partially reversed the drop in Q1 2023. The second largest increase was recorded in the United Kingdom (0.9%), driven by increases in social benefits and, to a lesser extent, by remuneration of employees. On the other hand, in the United States, growth of real household income per capita slowed to 0.5% in Q2 2023 from 2.3% in the previous quarter.

Real household income per capita and real GDP per capita in the OECD have been on an upward trend since Q2 2022 (Figure 2). While the two indicators diverged during the Covid-19 pandemic, with real GDP per capita climbing from its Q2 2020 trough and real household income per capita falling from Q1 2021, they are now evolving in tandem. The upward trend since Q2 2022 has been driven by the United States, the United Kingdom and France.

Among other OECD countries, Hungary experienced the highest growth in real household income per capita in the second quarter of 2023 (3.0%) as inflationary pressures eased. Poland experienced the largest contraction in real household income per capita (-3.4%), with real GDP per capita also falling (-1.3%).
Source: OECD