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Euro area household income and saving during the first wave of the pandemic

Author

Listed:
  • Ana del Río
  • José Antonio Cuenca

Abstract

This article assesses the immediate impact the first wave of the pandemic had on euro area household income, consumption and saving, both at the aggregate level and for the main economies in the area. Drawing on the institutional sector accounts, with information to Q2, there was a contained decline in household income, despite the worsening labour market, thanks to the speed and extensive scope of the economic policy measures approved. However, the collapse in consumption during the lockdown meant that saving rebounded in an extraordinary fashion. The outbreak of the second wave and uncertainty over the scale of the economic impact will contribute, for some time longer, to saving remaining relatively high and to the accumulated reservoir of private saving not fully materialising in the form of greater expenditure.

Suggested Citation

  • Ana del Río & José Antonio Cuenca, 2020. "Euro area household income and saving during the first wave of the pandemic," Economic Bulletin, Banco de España, issue 4/2020.
    • Handle: RePEc:bde:journl:y:2020:i:12:d:aa:n:43
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    References listed on IDEAS

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    1. Dossche, Maarten & Zlatanos, Stylianos, 2020. "COVID-19 and the increase in household savings: precautionary or forced?," Economic Bulletin Boxes, European Central Bank, vol. 6.
    2. de Bondt, Gabe & Gieseck, Arne & Zekaite, Zivile & Herrero, Pablo, 2019. "Disaggregate income and wealth effects in the largest euro area countries," Working Paper Series 2343, European Central Bank.
    3. Ángel Luis Gómez & José Manuel Montero, 2020. "Impact of lockdown on the euro area labour market in 2020 H1," Economic Bulletin, Banco de España, issue 4/2020.
    4. Lucía Cuadro-Sáez & Fernando S. López-Vicente & Susana Párraga Rodríguez & Francesca Viani, 2020. "Fiscal policy measures in response to the health crisis in the main euro area economies, the United States and the United Kingdom," Occasional Papers 2019, Banco de España.
    5. Daniel Alonso & Alejandro Buesa & Carlos Moreno & Susana Párraga & Francesca Viani, 2021. "Fiscal policy measures adopted since the second wave of the health crisis: the euro area, the United States and the United Kingdom," Occasional Papers 2118, Banco de España.
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    More about this item

    Keywords

    households; income; consumption; saving; pandemic.;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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