Post 246

A snapshot of what’s going on in the world’s economy.  Financial Ructions and book reviews can be a bit more technical so feel free to skip them.  See disclaimer at the end of this note.


  • Credit card delinquencies at smaller banks have hit all-time highs
  • So far it looks like inflation in the US bottomed last June.
    • It has increased for the second month in a row.
    • And Up often means Down once government analysts get their hands on the data.
  • Good news: Juries are granting car accident victims record payouts.
    • Bad news: You’re paying for it.
  • US job numbers were strong in March.
    • But more than 1.7 million full-time jobs have been lost since November.
      • The gains were all in part-time work.
  • Canada:
    • Population: Up.
    • Jobs: Down.
  • Population growth.
    • Can be a good thing.
    • Can be a bad thing.
    • But not “required” for an economy to grow.


Credit Card Delinquencies

For smaller banks (those not in the top 100).

  • Credit card delinquencies have hit all-time highs with data going back to 1991.
  • Average by decade:
    • 1990s: 4.29%
    • 2000s: 4.90%
      • Great Financial Crisis Peak: 5.61%
    • 2010s: 4.15%
    • 2020s: 5.98%
    • 2023 Oct: 7.80%

US Inflation: Rising

  • Jun: 3.0%
  • Jul: 3.2%
  • Aug: 3.7%
  • Sep: 3.7%
  • Oct: 3.2%
  • Nov: 3.1%
  • Dec: 3.4%
  • Jan: 3.1%
  • Feb: 3.2%
  • Mar: 3.5%

CPI one-month change:

  • Oct: 0.1%
  • Nov: 0.2%
  • Dec: 0.2%
  • Jan: 0.3%
  • Feb: 0.4%
  • Mar: 0.4% (4.8% annualised)

Core inflation excluding food and energy:

  • Jul: 4.7%
  • Aug: 4.3%
  • Sep: 4.1%
  • Oct: 4.0%
  • Nov: 4.0%
  • Dec: 3.9%
  • Jan: 3.9%
  • Feb: 3.8%
  • Mar: 3.8%

Big movers Up:

  • Car insurance: +22.2%
  • Baby food/formula: +9.9%
  • Veterinarian services: +9.6%
  • Beef: +7.6%
  • Nonprescription drugs: +7.4%
  • Ship fare: +6.8%
  • Smoking: +6.8%
  • Shelter: +5.7%
  • Sporting events: +5.2%
  • Movies/concerts: +5.0%
  • Electricity: +5.0%
  • Food away from home: +4.2%
  • Beer: +4.1%
    • PM: Stupid inflation!
  • Gasoline: +1.3%

Big movers Down:

  • Health insurance: -15.2%
    • PM: Note that this does not mean that health insurance premiums went down: see ‘here
    • PM: The government makes what’s called hedonic adjustments.
      • What this means is that if your premium went up, but the government thinks that the medical coverage you have received has improved even more, then they deem that a fall in the price you’re paying even if you’re paying more.
      • They do the same with cars.
      • That’s why so many people don’t believe the government when they tell them that prices are rising as much as they are.
        • And that people should stop complaining.
        • You’re seeing a number of mainstream economists and journalists pretty much telling people that they’re stupid.
          • Spoiler alert: they’re not stupid.
      • Particularly when it comes to understanding how much of their hard-earned money they have to spend to just to get by.
  • Apples: -10.1%
  • Smartphones: -9.0%
  • Car and truck rental: -8.8%
    • Tell me where it Hertz
  • Toys: -8.2%
  • Airline fares: -7.1%
  • TVs: -6.9%
  • Eggs: -6.8%
  • Men’s suits: -6.5%
    • PM: Ye ole work from home.
  • Appliances: -6.3%
  • Outdoor equipment: -4.9%
  • Ham: -4.2%
    • PM: Just in time for Easter.
  • Computers: -3.8%
  • Furniture: -3.8%
  • Fresh fish/seafood: -3.1%
  • Used cars/trucks: -2.2%
  • Coffee: -2.2%
  • Dairy and related products: -1.9%

More Inflation

Social inflation is a term used to describe the increasing claims costs that insurance companies face as a result of sympathetic juries that grant accident victims large payouts.

  • Guess who funds it?
    • See above for the rise in insurance premiums.

US Part-Time Jobs


New jobs:

Establishment Survey:

  • Dec: 290,000
  • Jan: 256,000
  • Feb: 270,000
  • Mar: 303,000
    • Big gainers:
      • Healthcare: +72,000
      • Government: +71,000
        • Quelle surprise.

Household Survey:

  • Dec: -683,000
  • Jan: -31,000
  • Feb: -184,000
  • Mar: +498,000

However, over the last four months the number of jobs created/lost (+/-)

  • Full-time: -1,787,000
    • PM: Jives with the tens of thousands of layoffs large companies have been announcing over the last twelve months.
  • Part-time: +1,600,000
    • PM: 5.2% of workers have more than one job.
      • Relatively steady over the last twelve months.
      • 5.1% pre-COVID

Canada Losing Jobs

  • Despite exploding population growth: +3.2% being the fastest increase since the 1950s.
    • The total number of jobs fell last month.
      • Down 2,200 in March.
        • Largest job gains: +40,000
          • Health Care and Social Assistance
      • Largest job losses:
        • Accommodation and Food Services: -27,000
        • Wholesales and Retail Trade: -23,000
  • Unemployment rate:
    • Feb: 5.8%
    • Mar: 6.1%
  • Over the last year, the number of unemployed people increased 247,000.
  • Average hourly wages: $34.81.
    • Up 5.1%
  • Growth in the number of jobs over the last year:
    • Private sector: 141,000
      • +1.1%
    • Public sector (government): 202,000
      • +4.8%

The Economics of Population Growth

In an opinion piece in the Globe and Mail, Eric Reguly discusses the hazards of a declining population.

  • Specifically, he cites John Maynard Keynes who said that a falling population would result in less demand.
    • Companies would respond by not investing as much and thus unemployment would rise.
  • PM: There are a number of things wrong with this.
    • First, companies don’t just invest to make “more” stuff, but they invest to make “new” stuff or make existing stuff more efficiently.
      • So, a declining population would not result in less investment on this score.
    • Second, too many people are unfamiliar with Say’s Law which “says” that it is “supply” that creates “demand.”
      • What this means, is that for you to have the ability to demand something from someone else, you must first have supplied something yourself.
        • For example, if you make bikes, and want to buy a suit, you must first build a bike to give yourself the wherewithal to buy a suit.
        • There is no real limit to the amount of stuff people want.
        • The only real limit is having the wherewithal to buy it.
        • But the more you produce and the more others produce the more each of you can have.
        • So, it doesn’t matter how large the population is.
          • People can still save, invest and exchange whatever they produced with each other.
            • And they can do so at an increasing rate.
    • Third, the first step to a “declining” overall population is an “ageing” population.
      • Many people worry that there won’t be enough people to do all of the jobs necessary to provide old folks with the required goods and services.
        • This is wrong, which I’ll discuss in a future post.
    • Fourth, demographics change very, very slowly over time giving people and companies more than enough time to adapt.
  • He does rightly point out that with a smaller population there are scale disadvantages i.e. large government expenditures become more onerous on a per person basis.
    • My post from last January touches on this: copied below.
  • And then finally he gets to the crux of the matter.
    • A declining population will expose the unaffordability of things like healthcare and pensions.
      • PM: As I have said many times, they’re unaffordable because we’re taking more out of the system than we’re putting in.
    • The only way we’ve been able to get away with it is to continuously increase the population such that the taxes the next generation pays are enough to off-set the taxes we didn’t pay to make our own benefits affordable.
      • In other words, the next generation has to pay part of our benefits in addition to all of their own.
      • Unless of course they’re successful in continuing to increase the population such that they can fleece the ones coming after them.
    • He says that if the government increased taxes on the next generation to pay for our generation’s unearned benefits, then those younger people may:
      • Evade taxes.
      • Vote for political parties that promise to cut tax rates.
        • PM: And benefits.
      • Move to low tax countries.
      • PM: Yes, to all, but most likely is a political change.
        • Why should they have to move to another country?
  • Bottom line is that I believe a slowly increasing population is a good thing and for many reasons, but not to fund unearned benefits for our generation. 
    • There is an ultimate end game when the world’s population can no longer grow, but of course that would be long into the future.
      • However, the math already doesn’t work in terms of rapid population growth causing a housing affordability crisis and rental affordability crisis.
      • In addition to the strain on the rest of our economy’s infrastructure.
  • However, a slowly declining population is not the calamity that many make it out to be.

From Post 243 on March 30, 2024

Population Growth

From a Globe and Mail editorial:

  • They claim that a country with a low birth rate cannot “grow and prosper.”
    • This is wrong.
    • Yes, population growth can help in a number of ways:
      • An economy can spread a number of high fixed costs over more people e.g. the more people that use a highway and are taxed to build it, the lower the cost per person.
      • In-fill parts of the economy where job skills are lacking.
      • A higher population increases the chance of the next Einstein being born (or the next Hitler).
      • Greater diversity leads to better decision making and outcomes.
    • But productivity growth does not “require” population growth.
      • It requires savings and investment.
      • And this leads to increasing GDP per capita.
        • Even if GDP itself is falling.
      • What does require high population growth?
        • Ponzi-like government benefits schemes that pay people more than they contribute.
        • Home prices growing ever higher.
          • The burden of both is dumped on the backs of the next generation.

And from post 226 on January 17, 2024.


  • Policymakers often point to stats like this to justify outlandish levels of immigration.
  • They will point out that the “dependency ratio” is getting to worrisome levels.

1.    Dependency ratio definition ‘here’ from Investopedia:

  • Dependents are:
    • Those under the age of 15.
    • Those aged 65 and over.
      • Add up the total number of “dependents” and divide that by the total number of people aged 15-64.

2.    With birth rates going down, the fear is that there will eventually be fewer workers to tax in order to “support” a quickly aging population.

  • I.e. the next generation won’t be large enough to support our generation in our old age.

3.    A couple of things:

  • Each generation should be self-sufficient i.e. on a net basis we should only be taking from society what we contribute.
    • So, on net, we should be saving and investing enough to fund ourselves and those of our generation who were not able to save enough for themselves.
  • It shouldn’t come at the expense of our kids.
  • Otherwise, it’s more like a Ponzi scheme.
  • Here is the definition from Investopedia:
  • A Ponzi scheme is a fraudulent investing scam which generates returns for earlier investors (PM: our generation) with money taken from later investors (PM: our kids). This is similar to a pyramid scheme in that both are based on using new investors’ (kids) funds to pay the earlier backers (us).
    • Policymakers will tell you that an increasing population is required for an economy to grow.
    • No it isn’t.
    • An economy can grow with zero population growth and even negative population growth through savings and investment.
    • Also, although you can grow total spending in an economy by increasing the population, it doesn’t mean that total spending per person is also rising.
  • In Canada, total spending is increasing while per person spending is falling.
  • This is because the government is focused on boosting total spending rather than productivity growth (the latter takes longer).
    • There are lots of great things associated with immigration, but boosting total spending in the economy is not one of them.
    • Of course a larger population has scale benefits for certain types of spending.
      • For instance, if you want to build an aircraft carrier, it’s a lot easier to obtain the funds by taxing 350 million people rather than 350 thousand.
  • And as pointed out a number of times, the very high levels of immigration in Canada that are far in excess of the increase in the housing stock are helping to drive housing prices through the roof.
    • So not only is the next generation expected to help fund our retirement, but they’re also required to pay significantly more than we did for our homes.
    • This won’t end well.

Disclaimer: Note that Paulitical Economy™ should not be considered as investment advice, and I have not verified all of the sources of information.  It is meant for general interest purposes only.  Please consult an advisor if you plan on putting any of your hard-earned capital to work during these turbulent times.

Submit your email to get notifications about new Paulitical Economy™ posts and updates: