Morning Market Brief: Friday, May 12, 2023

End of pandemic support deflated household incomes in 2022

According to the latest report by the Organization for Economic Cooperation and Development (OECD), household income fell by a record margin of 3.8% in 2022 on an annual basis. The decline in OECD countries occurred despite some growth in household income in the second half of 2022.?

• Among G7 countries, household income declined by 3.9%. The decline in the US was 6% as the government ended programs that supported households during COVID-19.
• Chile’s household income declined by 15.1%, the highest drop outside the G7. In 2021 the government granted permission for people to make early pension withdrawals. This policy ended in 2022.
• In OECD countries where the end of pandemic assistance programs had less impact, inflation watered down consumer spending power.?
• Although household incomes fell annually, some countries reported an increase per capita in the fourth quarter of 2022. These included Canada, the US, the UK and France. UK households benefitted as the government supported energy consumption during the quarter.

Earnings reports this week in Canada will gauge the overall financial health of companies and consumers. Canadian Tire Corp. Ltd. reported lower same-store sales in the first quarter of 2023 versus the same period in 2022, citing consumer demand and a mild winter as potential factors. It could be an important time to monitor the performance of Canadian companies in your portfolio, given the volume of earnings data that is released.

At?CIBC Private Wealth, we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.