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A long-term perspective on household income

A long-term perspective on household income

Posted on: 11/8/2018 | Author: ATB Financial's Economics + Research Team

​​We tend to view economic indicators month to month, considering only the short-term fluctuations and trends. But backing up and considering a much longer time horizon can often yield interesting perspectives. This is especially true of household income.

The graph below presents 90 years worth of data, examining real household disposable income per capita for Alberta and Canada. Real income means it’s been adjusted to account for inflation, and in this case, the data have been adjusted to represent dollars in 2002. Disposable income is after taxes and other deductions, and per capita means it is per person in each household.

Alberta tracked the Canadian average for real income almost precisely until the early 1970s—not coincidentally around the time oil prices started to rise sharply and Alberta’s energy-fuelled economy took off. Real disposable incomes have been consistently higher than the Canadian average ever since.

The occasional recession in Alberta is illustrated by the bumps and bruises along the way. The recessions of the 1980s, and again in 2002 and 2009, can be seen with a drop in real disposable income.

The steepest drop happened in 2016 when real disposable income in Alberta plunged almost 10 per cent from $30,428 in 2015 to $27.506 in 2016. Still, through all of the recessions and fluctuations in Alberta’s economy, incomes in this province have remained consistently above the national average.

Household disposable incomes, graph​​​

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