Growth in GDP is the most common measure of economic performance. But household income can provide a better picture of people’s material well-being. That is because some of the income that counts towards GDP goes to non-residents, firms and governments. Over the past eight years GDP growth has outpaced that of household income in the OECD, a mostly rich-country club. The gap is big in Britain, where household incomes fell in real terms at the start of the decade, even as GDP expanded. In America growth in household income per person has outpaced GDP per person by 3.4 percentage points since the first quarter of 2010, in part because of low household taxes.
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