Govt Support Measures Continue To Shield Household Income From Economic Impact Of COVID-19 In Second Quarter Of 2020
Despite the significant (10.6%) fall in real GDP growth per capita in the OECD area in the second quarter of 2020, growth in real household income per capita, which provides a better picture of changes in households’ economic well-being, increased by 5.3% on the back of COVID-19 government support measures.
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Most OECD countries saw household disposable income outperform GDP. While a majority recorded falls in both measures during the second quarter of 2020, Canada and the United States saw significant growth in household income per capita of 11.0% and 10.1% respectively, reflecting broad based monetary transfers to the household sector in response to COVID-19. Smaller increases in real household income per capita were also observed in Ireland (3.6%), Australia (2.7%) and Finland (1.1%).
Some care is needed in comparing movements across countries however, as the significant increase in household income for the United States reflects the large, but temporary, characteristics of the specific government support made in April 2020, namely the CARES Act of 2020. Indeed, the United States Bureau of Economic Analysis has already reported a decline of 4.4% in real disposable personal income for the third quarter of 2020.
For the OECD area, the significant divergence between household income growth and GDP growth resulted in the largest positive gap on record between the two measures (15.1 percentage points).