The Third World welcomes Canada and Australia

The National Bank of Canada has released a new report detailing the collapse of Canadian living standards in relation to the United States:

“(Canada’s) population aged 15 and over increased by a record 3.5% in the first quarter, making a positive contribution not only to GDP but also to potential output.”

“As a result, GDP per capita will fall further in the first quarter, continuing the downward trend that started when interest rates started to rise. This shows that the economy has been functioning well below potential for some time.”

“Canada’s economic weakness is also reflected in the rapidly weakening labor market. The workforce is no longer keeping pace with population growth, and the weakness has been particularly visible in the private sector since mid-2023.”

“The unemployment rate now stands at 6.1%, an increase of 1.3 percentage points since the start of monetary tightening, with young people and immigrants hardest hit by this deterioration.”

“Unemployment among 15-24 year olds has risen by 3.3 percentage points since the start of monetary tightening, the sharpest increase ever seen outside a recession.”

“As for recent immigrants (those who arrived five years ago or less), their unemployment rate has risen 3.6 points since its low point in 2022.”

“Since the tightening of monetary policy, the share of companies facing labor shortages has fallen dramatically (from 48% to 27%). On the other hand, almost half of companies are concerned about customer demand in the current climate of uncertainty (18% in Q2 2022).”

“The Canadian labor market has relaxed significantly compared to other advanced countries. According to the OECD, the inflation-adjusted unemployment rate (NAIRU) stands at 6.2%, barely above the 6.1% unemployment rate recorded in March.

“All other G7 countries are currently showing a wider gap between their unemployment rates and their NAIRU, meaning tighter labor markets.”

A separate analysis from the National Bank of Canada shows that the country’s housing shortage has reached a record high after the working-age population grew by 300,000 last quarter (an annualized rate of 3.7%), compared with new homes in the United States. only 61,000 in the first quarter of 2024:

The unprecedented rise in population demand has pushed rental vacancy rates to historic lows and sent rental inflation through the roof:

Meanwhile, productivity growth in Canada has collapsed as population growth has outpaced the expansion of business investment, housing and infrastructure, leading to a decline in capital:

“Demographic ambitions are too high in relation to the capital stock available in the country. According to our calculations, Canada’s capital stock per capita will decline by almost 1.5% in 2023.”economists at the National Bank of Canada wrote earlier this year.

“This means that our population is growing so quickly that we do not have enough savings to stabilize our capital-labor ratio and achieve an increase in GDP per capita.”

“Simply put, Canada is in a population trap for the first time in modern history. More worrying is the fact that the decline is not simply due to a lack of housing infrastructure.”

“In fact, the ratio of private non-residential capital stock to population has been declining for seven years and is currently no higher than it was in 2012, while in the US it is at a record high.”

“Canada is caught in a population trap that has historically been the preserve of emerging economies. We currently lack the infrastructure and capital stock in this country to adequately accommodate current population growth and improve our living standards.”

“Our policymakers must balance Canada’s population goals with limiting our capital stock beyond housing supply if we want to improve our productivity.”the economists advised.

The situation is now so bad that Indian migrants are now leaving Canada for the United States:

“In 2023, 30,010 Indian nationals were apprehended at the northern border. Another 16,622 have arrived this fiscal year, which began Oct. 1.”

“Indians are now the third largest group of undocumented immigrants in America.”

Similar forces are at play in Australia, which is also struggling with record net overseas migration, collapsing productivity growth, a worsening rental crisis and falling living standards.

“Australia’s economic performance in the decade before the pandemic was, by many measures, the worst in 60 years,” Independent economist Gerard Minack wrote this in his November report.

“GDP per capita growth was low, productivity growth was tepid, real wages stagnated and housing became increasingly unaffordable.”

“There were many reasons for the mess, but the main one was a massive switch from capital to labor: Australia relied on increasing labor supply, rather than increasing investment, to drive growth.”

“Australia’s population-led growth model was a demonstrable failure in the 15 years leading up to the pandemic.”

“Remarkably, the country now appears to be doubling down on the same strategy. The result will, predictably, likely be more of the same,” Minack wrote.

Canada and Australia are headed for an Argentinian future if they continue to pursue the same broken, low-productivity, population-driven economic model.

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