Sunday, July 30, 2023

Economists Admit Migration Spikes Inflation; Global Migration Boom Keeps Housing Costs High: Surging Immigration is Boosting Rents and Supporting Home Prices, Complicating Inflation Flight

Mert Alper Dervis/Anadolu Agency via Getty Images
Economists Admit Migration Spikes Inflation:
Mass migration is spiking inflation in Canada because migrants increase rents and housing prices, say Canadian economists.
The Canadian admission contradicts repeated claims by U.S. lobby groups that migration cuts inflation by lowering wages.
The admission is important for U.S. politics because it shows Americans how President Joe Biden’s easy-migration policy is fuelling the unpopular inflation that is impoverishing many millions of Americans. “Wages are NOT keeping up … Since President Biden took office, the average worker has lost over $4,900 in real wages,” said a June 26 report by the GOP-led House Budget Committee.
The key point for economists is that legal and illegal migrants are not just cheap wage-cutting workers; they are also consumers who raise prices by competing to buy housing, used autos, and many other goods and services.
When migrants arrive, “the extra spending and the extra demand for housing is almost instantaneous, whereas it might take a new [wage-cutting] worker a little bit of time to really act as a dampener on inflation,” Bank of Montreal Chief Economist Doug Porter told Bloomberg Businessweek for a July 17 article.
“The short-term impact does tend to lift inflation,” he admitted.
Bloomberg showed how a mass inrush of migrants has created an inflationary shock in Canada’s housing market: --->READ MORE HERE
Photo: Brent Lewin/Bloomberg News
Global Migration Boom Keeps Housing Costs High:
A wave of immigration to affluent countries is adding upward pressure to housing costs, frustrating renters and home buyers and making it harder for central bankers to tame inflation.
From Europe to Asia and North America, people have been moving across borders in record numbers, lured by tight labor markets and looser post-Covid travel rules. Many are landing in cities where housing is in short supply.
That is helping push up rents and keep home prices from falling as much as expected despite sharp increases in borrowing costs, especially in Europe, Canada and Australia.
In Canada, which absorbed a record 437,000 migrants last year, property prices started rising again in February after 10 straight monthly declines. In the U.K., annual inflation in rents in May hit its highest level since records began in 2016, and has accelerated for 20 of the past 21 months.
In the U.S., rent growth is slowing, but home prices have started rising again after falling over the past year. The median U.S. existing-home sales price bottomed at $361,200 in January and has risen each month since, according to National Association of Realtors data, though they are still down year-over-year.
Rent and housing costs continue to be a driver of inflation in the U.S., accounting for 70% of the 0.2% increase in consumer prices during June.
Many factors, including underinvestment in supply of new houses, and a reluctance by some owners to sell, are helping keep housing costs elevated in the U.S. Still, some economists say the arrival of so many legal and illegal immigrants is also part of the equation. The U.S. population grew by 1.26 million people last year, the fastest rate since 2019, with almost all of the increase—one million—coming from immigrants.
A recent Goldman Sachs report pointed to immigration as a key reason why house prices in major economies have shown signs of leveling out at higher prices than expected following declines sparked by interest-rate hikes. --->READ MORE HERE
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