A primer on measuring household income

The disposable income of households, as measured in the national accounts, benefited from rising labour income and continued strong growth in non-labour income in the first half of 2023. But not all components of income generate a positive cash flow for households. This mainly concerns non-labour income (excluding net fiscal income), which benefited from the exceptionally strong growth in gross operating surplus and the strong increase in financial intermediation services indirectly measured (FISIM). These two components do not generate positive cash flow for households and may therefore not be reflected in households’ income perceptions, which recently lagged behind the positive income developments as measured in the national accounts. One indicator of growth in household income that comes closer to household perceptions is compensation of employees. Looking ahead, the negative assessment by households of recent real income growth appears to be consistent with the muted outlook for private consumption. JEL Classification: E22, E32