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A dash of data: Spotlight on German households

February 11, 2016

Leonie Beisemann, OECD Statistics Directorate

German version available here.

Economic growth (GDP) always gets a lot of attention, but when it comes to determining how people are doing economically it’s interesting to look at other indicators that focus more on the actual material conditions of households. Let’s see how households in Germany are doing by looking at a few of these other indicators.

GDP and household income

Chart 1 shows the development of real GDP per capita and real household disposable income per capita since the first quarter of 2007, with this quarter being set to the baseline level of 100. For the most recent quarter for which we have data, Q3 2015, real GDP per capita, which adjusts economic growth for the size of the population, increased 0.1% from the previous quarter (the index increased from 107.3 in Q2 2015 to 107.4 in Q3 2015). Real household disposable income per capita showed stronger growth, increasing 0.4% from the previous quarter (the index increased from 105.9 in Q2 2015 to 106.3 in Q3 2015). However, despite the stronger growth in household income in the most recent quarter, and the sharp drop in economic growth during the financial crisis, GDP has grown more than household income since 2007: 7.4 % versus 6.3%.


The increase in household disposable income in Q3 2015 was caused by an increase in primary income, mainly due to increases in compensation of employees and dividend income. On the other hand, taxes and social contributions paid by households increased more than social benefits received by households, meaning that net cash transfers to households declined slightly (chart 2).

Chart 2 shows that the net cash transfers to households increased sharply during the depth of the financial crisis (at the beginning of 2009), corresponding to when real household disposable income began to diverge from the pattern exhibited by economic growth, as shown in chart 1. This clearly shows that government intervention was successful in cushioning households from the negative effects of the contraction in economic growth.


Confidence, consumption and saving

Household disposable income is a meaningful way to assess material living standards, but to get a fuller picture of household economic well-being it is interesting to look also at households’ consumption behaviour. Consumer confidence (chart 3) fell in Q3 2015 (the index decreased from 101.5 in Q2 2015 to 101.0 in Q3 2015) reversing the upward trend seen during the first two quarters of 2015. Notwithstanding this slight drop in consumer confidence, real household consumption expenditure per capita increased 0.3% in Q3 2015 (chart 4), with the relevant index increasing from 107.1 in Q2 2015 to 107.4 in Q3 2015.



The household savings rate (chart 5) shows the proportion that households are saving out of current income. In Q3 2015, the savings rate was 16.9%, the same rate as in the previous quarter. Overall, German households have a relatively high savings rate (on average 16.7%, one of the highest among OECD countries). It is also relatively stable (the rate varies the least among OECD countries).


 Debt and net worth

The household indebtedness ratio, i.e. the total outstanding debt of households as a percentage of their disposable income, can be looked at as a measure of (changes in) financial vulnerabilities of the household sector and can be helpful in assessing debt sustainability. In Q3 2015, household indebtedness was 85.5% of gross disposable income (chart 6), 0.2 percentage points higher than the previous quarter (mainly related to a rise in long-term loans). Over a longer period of time, since the beginning of 2007, one can observe a steady decline in household indebtedness in Germany.


When assessing vulnerabilities on the basis of indebtedness, one should also take into account the availability of assets, preferably both financial assets (saving deposits, shares, etc.) and non-financial assets (for households, predominantly dwellings). Because information on households’ non-financial assets is generally not available on a quarterly basis, financial net worth (i.e. the excess of financial assets over liabilities) is used as an indicator of the financial vulnerability of households.

In Q3 2015, financial net worth of households was 196.5% of disposable income (chart 7), 3.2 percentage points less than in the previous quarter. The decrease was mainly due to holding losses on equity and investment fund shares on the asset side and the slight increase in household debt mentioned above.



The unemployment rate and the labour underutilisation rate (chart 8) also provide indications of potential economic vulnerabilities of the household sector. More generally, unemployment has a major impact on people’s overall well-being. In Q3 2015, the unemployment rate in Germany continued its fall since 2007 and at 4.6% it is the lowest rate of unemployment since 1991. The labour underutilisation rate shows a similar pattern: in Q3 2015, it reached a new low of 9.2%.


One should keep in mind that households’ income, consumption and savings may differ considerably across various groupings of households; the same is true for households’ indebtedness and (financial) wealth. The OECD is working on these distributional aspects and preliminary results have been published in “Measuring inequality in income and consumption in a national accounts framework” and in “Household wealth inequality across OECD countries: new OECD evidence”.

While the financial crisis did affect the German economy, its consequences have been relatively modest when compared with other OECD countries. GDP per capita and household income per capita returned to their pre-crisis levels quickly. The positive developments in household income and consumption reflect continuous improvements in the German labour market since 2010. To fully grasp people’s overall well-being, one should go beyond household material conditions, and look at a range of other aspects of people’s lives and how they feel. Indicators on these other aspects (e.g. health, education, environmental quality, and personal security) are regularly published in the OECD How’s Life publications.

Useful links

For many years, OECD has been focusing on people’s well-being and societal progress. To learn more on OECD’s work on measuring well-being, visit the Better Life Initiative.

Interested in how households are doing in other OECD countries? Visit our households’ economic well-being dashboard.

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