According to data from the National Institute of Statistics (INE), the average salary increased from 23,450 euros in 2019 to 26,555 euros in 2023. An increase of 13.2% that was not accompanied by Household spending: before the pandemic, it was 26,185 euros; four years later, it fell to 25,475 eurosIn the case of consumption, the figures are adjusted to constant prices, i.e. taking into account inflation.
Average spending per person has not recovered either and remains 2.6% lower than last year before the pandemic. If in 2019 it amounted to 10,512 euros, finished last year almost 300 euros below.
However, when talking about salary increases, it is important to take into account price evolutionthat is, inflation. In this sense, during the period analyzed (2019-2023), products and services have become more expensive, on average, by 15.5%. Or, what amounts to the same thing, prices have increased more than wages themselves, thus reducing purchasing power and therefore consumption itself.
As highlighted Miguel CardosoChief economist for Spain at BBVA Research, “40% of the increase in income in 2023 was concentrated in older groups, who have little propensity to consume.”
In other words, the gains in purchasing power occurred among the over-50 age group thanks to the increase in pensions and property incomebut this population group is not the one that drives consumption.
“As you get older, you spend less and your willingness to buy things decreases dramatically. Older people aren’t interested in the latest iPhone“, summarizes Cardoso. On the contrary, underlines the economist of BBVA Research, “Real wages have fallen due to the loss of purchasing power” and a good part of the increase in wage income comes from boom of the labor market.
Other data sources show the lack of dynamism in family spending. In 2019, household consumption accounted for 57.2% of GDP, almost two points more than last year, when the proportion stood at 55.6%.And during this period, while the economy grew by 17.4%, household consumption increased by 13.8%.
As the previous graph shows, Spain is not the only country among the major European economies that has not returned to pre-pandemic spending levels, but yes, it is one rare bird regarding behavior in recent years. It is the only country that has experienced a decline between 2022 and 2023, demonstrating a contraction in household spending beyond that explained by the pandemic.
On the savings side, Spain’s behaviour also differs from that of countries such as Germany or France. While the savings rate (gross savings to gross disposable income) in the first quarter of 2021 was 13.3%, in the same quarter of this year it was almost one point higher.
On the contrary, In Germany it fell by three points and in France by more than two points.And Italy saw an even bigger drop, with the savings rate in the first months of 2024 almost five percentage points lower than in 2021.
In this sense, Cardoso indicates that the gross disposable income has increased in households where the number of income recipients has increased, where immigrants stand out, protagonists of this situation. boom employment. However, Immigrant households, like those of the elderly, are less willing to consume.
“Immigrants have a lot of uncertainty. They may arrive without rights, such as unemployment benefits, and they do not know if they will be able to keep their jobs,” explains the chief economist for Spain at BBVA Research. In addition, he continues, they send money to their country of origin. and, in conclusion, “they save a lot”.
More holidays, fewer cars
More holidays, but less furniture, TVs and cars. Nearly half of families plan to spend a significant amount on travel in the next year, while less than 20% plan to spend on household items; just over 5% plan to make a major purchase of a car.
According to the latest Quarterly report of the Bank of Spain, Average household consumption remains below pre-pandemic levelsAccording to the regulator, consumption among higher-income families remains four percentage points below pre-pandemic records, while in the case of those over 65 it has recovered and is two percentage points below above.
“We believe that consumption must resume “due to the improvement in employment and wages and the fall in interest rates, but there is still a recomposition of the basket,” he explained on Tuesday. Angel GavilanDirector General of Economy and Statistics of the Bank of Spain. This restructuring consists of a loss of weight of these household goods in favor of tourist services.
However, not everything that was previously allocated to large durable goods has been transferred to services, hence the decline in consumption. In conclusion, household savings have increasedThis is happening among the highest-income families, those with a four percentage point gap compared to pre-pandemic consumption.
Faced with this, the middle and low income households They have almost returned to 2019 consumption levels. Despite wage improvements, they have the least room for savings and essential expenses predominate in their basket.
In any case, and despite the recovery forecasts, Gavilán acknowledged the “weakness” of household consumptionwhich surprised the regulator “in a negative way”. A surprise that, in the end, does not mean that the Bank of Spain considers that, in the coming quarters, internal demand will gain weight compared to external demand, which is still booming due to the arrival of tourists.
