Jim Cramer was on CNBC this morning talking macro. He highlighted population growth as a critical factory restraining wages and taming inflation.
He cited 10 million people entering the country since the pandemic. That doesn’t match up with what the Census Bureau is saying as the official number for the year ending in July 2023 was about 1.6 million — the same as the pre-pandemic norm. Now he’s probably talking about illegal immigration but Pew Reserach estimates total US illegal immigrants at 10.5 million.
Of course, it’s illegal so it’s tough to count and estimates are only estimates.
Let’s say take the 10 million number at face value. Republican presidential candidate Nikki Haley, the former U.S. ambassador to the United Nations, claimed in January that 8 million “have come in illegally” and “we have to send them back.”. Other numbers range as high as 10 million since 2019.
Now all these numbers are highly disputed and nearly 2.5 million people at the US border were immediately turned away.
But whatever: Let’s go wild and say that 10 million people entered last year alone into a country of 331 million people. That would be population growth of 3.0%. Even at that extreme rate, it still wouldn’t match the official rise in Canadian population of 3.1%.
The numbers in Canada are shocking and help to explain Prime Minister Justin Trudeau’s ongoing implosion. But — more importantly — the economic effects will be real and multi-faceted, whether it’s in Canada, the US or elsewhere.
For instance, we learned today that Canadian CPI was higher than expected and that the main component driving that is rent, which rose 8.4% year-over-year. Sequentially over the past three years beginning in May, rent in Canada is up 4.4%, then 5.7% and now 8.9% — those numbers are compounding.
In opposition, wage pressures are likely to come down very quickly because of this chart:
Unemployment among immigrants is rising rapidly, which explains some of the viral videos of miles-long lines for job hiring in low-skilled jobs.
The result is — and this is something the Bank of Canada has acknowledged — is that we will have a two-track system where low-skilled jobs are far overstaffed while high-skilled jobs (particularly ones like healthcare that grow proportionally in line with population) are going to be in short supply.
it’s a mess, but if you’re at the bottom of the food chain it’s absolutely brutal as you get crushed by rents and can’t find a job. That’s a recipe for general inflation (because there are many unskilled jobs) but also for some serious anger.
This article was written by Adam Button at www.forexlive.com.
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