Household disposable income outpaces GDP growth for OECD area since 2007: OECD

Disposable income rises 8.1% between Q1-2007 and Q1-2015 against GDP growth of only 3.2%

Growth in household disposable income has, on average, outpaced the rise in GDP for the OECD area since the onset of the financial crisis in 2007, according to the OECD. Its new Dashboard of Household Indicators shows that disposable income per capita rose by 8.1% between the first quarter of 2007 and the first quarter of 2015 for the OECD as a whole, while OECD GDP growth per capita increased by only 3.2% over the same period.

Martine Durand, chief statistician at the OECD, said "In most OECD countries, GDP dropped sharply at the beginning of the financial crisis, while real household income showed more resilience due to both automatic stabilisers and supportive fiscal policies. However, this masks the fact that patterns diverge across countries as purchasing power still remains below pre-2007 levels in a number of countries, including Austria, Greece, Ireland, Italy, Portugal and Spain, and since 2010 GDP per capita growth has outpaced household income growth in most OECD countries".

Because broad GDP growth figures are not well-suited to measuring people's material well-being, the OECD has compiled the Dashboard to give a more accurate picture of the economic and financial health of citizens.

The Dashboard brings together household indicators such as disposable income, consumer spending and confidence, and savings and indebtedness rates. To help assess how financially vulnerable people are, it also includes the unemployment rate, the broader labour underutilisation rate and the financial net worth of households.

Household disposable income rose 0.8% in the first quarter of this year in the OECD area, twice the 0.4% GDP-per-capita growth rate. The quarter-on-quarter rise in household disposable income was particularly marked in Denmark where it rose a provisional 5.9% in the first quarter of 2015 against a background of per capita economic expansion of 0.4%. In France, purchasing power climbed 1.2% while per capita GDP grew 0.6%. The rise in disposable income was also marked in Spain (up 1.6%), Portugal (up 2.3%) and the Netherlands (up 1.7%).

The strong rise in purchasing power in Denmark in the first quarter of 2015 can in part be explained by an increase in property income (such as dividends) and lower tax payments, although these estimates may be revised with the release of second quarter of 2015 data. In France the rise in household purchasing power was driven mainly by wage rises, lower tax payments and a slight increase in social benefits.

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