The OECD notes a sharp drop in household income in the spring

Another paradox left by the global economic outlook. While the Gross Domestic Product (GDP) is recovering strong, there has been a general collapse of citizens’ incomes. This is what the Organization for Economic Co-operation and Development (OECD) warned in its latest report published on Monday. As has become the norm of late, Spain is not doing well and is recording one of the biggest drops.

Specifically, in the second quarter of 2021, it recorded a 1.17% decrease in real per capita income compared to the previous three months, which represents one of the largest reductions among the countries of this “club of more advanced economies”. In fact, it’s a decrease of half the average recorded, which stands at 3.8% after aid withdrew in the US, but it puts Spain in the sixth worst record.

On average, countries that are part of the ‘club of more advanced economies’ saw a 3.8% decrease in per capita disposable income compared to the first three months of 2021, when it rose by 5.2%, despite the fact that per capita disposable income rose by 5.2%. Gross domestic product of the Organization for Economic Co-operation and Development increased by 1.6% in the second quarter of the year.

“The decline was driven by the sharp decline in household income in the United States, as the financial support provided by the government during the pandemic began to decline,” the organization explained.

Indeed, in the second quarter of 2021, Americans experienced the largest drop in disposable income in the entire OECD, with a decline of 8.35% compared to the previous three months, when their wealth increased by 11.2%.

Behind the United States, the OECD households experiencing the largest loss in disposable income between April and June were Greece (-4%), Hungary (-2.7%), the Netherlands (-2.1%), Ireland (-1.4%) and Spain (-1.17%), Australia and the United Kingdom (-1% both), Finland (-0.6%), and Italy (-0.1%).

In the case of Spain, the decline in per capita disposable income in the second quarter of 2021 adds to the 1.06% decline in the first three months of the year and represents the seventh quarterly decline in the past eight quarters, with the only exception to a 9.5% rise in the third quarter of 2020.

In contrast, the OECD countries with the largest quarterly increase in available household wealth were Chile (22.1%), following the government’s decision to grant early access to pension funds, ahead of Slovenia (6.2%), and Poland (2.4 %), and Austria. (2.1%), Belgium (1.9%), Norway (1.7%), and Canada (1.4%).

The real disposable income of each inhabitant represents the set of income received, after deduction of taxes and social contributions including monetary social benefits such as unemployment collection. The data reveals the maximum amount a person can spend for consumption without reducing his net worth.

On the other hand, the Organization for Economic Cooperation and Development indicated that real GDP per capita in the second quarter of 2021 remained below its level in the last quarter of 2019, before the start of the Covid-19 epidemic, while it exceeded the real income of households per capita. This level increased by 3.6%.