Jim Cramer was on CNBC this morning to talk macro. He stressed that population growth was a key factor in restraining wages and controlling inflation.
He cited 10 million people who have entered the country since the pandemic. That doesn’t match what the Census Bureau says, since the official figure for the year ending July 2023 was about 1.6 million, the same as the norm before the pandemic. Now, he’s probably talking about illegal immigration, but Pew Research estimates the total number of illegal immigrants in the United States at 10.5 million.
Of course, it’s illegal, so it’s hard to count and the estimates are just estimates.
Let’s take the figure of 10 million literally. Republican presidential candidate Nikki Haley, a former U.S. ambassador to the United Nations, said in January that 8 million people “came in illegally” and “we need to send them back.” Other figures go up to 10 million Since 2019.
Today, all these figures are very controversial and almost 2.5 million people at the US border were immediately turned back.
But no matter: let’s say 10 million people entered last year alone in a country of 331 million people. This would represent population growth of 3.0%. Even at this extreme rate, this would still not match Canada’s official population increase of 3.1%.
Population growth in Canada and the United States
The numbers in Canada are shocking and help explain the current implosion of Prime Minister Justin Trudeau. But – more importantly – the economic effects will be real and multifaceted, whether in Canada, the United States or elsewhere.
For example, today we learned that the Canadian CPI was higher than expected and that the main driver of this was rent, which increased by 8.4% year-over-year. Sequentially over the past three years, starting in May, rents in Canada have increased by 4.4%, then 5.7% and now 8.9% – these numbers keep getting worse.
On the other hand, wage pressures should decrease very quickly because of this graph:
Unemployment on the rise among immigrants in Canada
Unemployment among immigrants is rising rapidly, explaining some viral videos showing mile-long queues for low-skilled jobs.
The result is — and this is something the Bank of Canada has acknowledged — that we will have a two-tier system in which low-skill jobs will be grossly overstaffed while high-skill jobs (especially those like health care that grows proportionally with the population) will be rare.
it’s a disaster, but if you’re at the bottom of the food chain it’s absolutely brutal because you’re crushed by rent and you can’t find work. This is a recipe for general inflation (because there are many unskilled jobs) but also for some anger.
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