Canadian incomes see largest pandemic jump in OECD

With household income rising despite a decline in GDP, Canada defied the trend in most other major economies in the second quarter, according to the Organization for Economic Co-operation and Development (OECD).

The Paris-based group reported that, of the world’s seven major economies, Canada managed the strongest gain in household income in Q2, with real household income per capita rising 1.4% despite a 0.5% dip in GDP.

Along with Canada, household income also rose in France and Germany in Q2, the OECD said.

This stood in stark contrast to much of the rest of the OECD, which saw incomes decline in the face of rising GDP.

Overall, per capita household income fell by 3.8% in the second quarter throughout the OECD area, despite a 1.6% gain in GDP.

“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income in the United States, as fiscal support provided by the government during the Covid-19 pandemic began to be withdrawn,” the group noted.

In the U.S., income dropped 8.3% in Q2, following a first-quarter jump of 11.2% driven by pandemic-related transfers.

Fiscal stimulus in the U.S. has provided “strong household income growth relative to GDP growth throughout the pandemic,” the OECD said.

Excluding the U.S., household income in the rest of the OECD has still grown since the onset of the pandemic, it noted, “but growth has been both smoother and more restrained, maintaining its long-term trend despite a fall in GDP per capita.”

In Q2, household income for the OECD overall was 3.6% above its pre-pandemic level, even as GDP remained below its pre-pandemic mark.

“Over this period, the strongest growth in real household income per capita was in Canada, at 9.4%,” the OECD noted, followed by the U.S. at 6.2%.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.