Closing doors

Rents are falling. The real estate market is a swamp. Hiring is up.

Is this because population growth in Canada has collapsed? Is this a good thing, or are we risking economic slowdown just when Donald Trump is thumping the nation?

The short answer, says a TD economics report released today is yes. It’s good. The population, it says, is being “right-sized”. The growth in Canada that hit a multi-decade record of 3.2% annually has now plunged to 0.9%. Given the country’s ultra-low birth rate (a record low of 1.25 per female while the average age of new moms soars to 32 years), analysts figure our population may actually decline. In a country that’s already basically empty, should we cheer this?

Source: TD Economics

Most Canadians are under the impression the doors are still wide open to newcomers. They are not. This year 395,000 immigrants will be allowed (0.9% of the population), with that number decreasing annually. Temporary resident levels have been reduced. International student visas slashed.

Of those we allow on the path to citizenship, 60% come as economic immigrants (skilled workers to fill open jobs), a quarter arrive to reunite with family and the remainder are allowed in as refugees offered protection from persecution.

In contrast, the US has deported 570,000 people so far this year. This week ICE (the immigration/deportation/pepper spraying, masked cops) is being reorganized since the White House is unhappy. It wanted a million people gone by now.

Well, what’s been the experience in Canada since we throttled the flow of new people?

These are the bank’s conclusions, in its own words:

• Canada’s rapidly decelerating population growth is showing evidence of easing pressure on the social and economic infrastructure.
• Reduced immigration has moderated demand for purpose-built rentals and, consequently, rent growth. We estimate rent growth will likely average 2% lower than the counterfactual scenario of maintaining higher population growth. Condo asking rents are also falling fastest in jurisdictions most exposed to immigration changes.
• Canada’s current unemployment rate would likely be at least 1% higher if immigration growth had continued unabated.
• However, one area of surprise has been the absence of a parallel slowdown in household spending.

In short, fewer people joining the country has brought some benefits – mostly evident in lower urban rents. Real estate prices have not really budged, which is unsurprising since the overwhelming majority of immigrants and non-permanent residents are renters, not buyers.

There are fewer job-seekers, which should help employment prospects, but the unemployment rate has not fallen off the 7% mark. As for economic activity, it seems Canadians have been spending extra lately, making up for the reduced stimulus of a more rapidly-growing population.

Reduced immigration, says the bank, “does not resolve all of Canada’s structural issues, it was an important reform at the right time in the economy. It has contributed to easing pressure in the national housing market—particularly in rentals — and has stemmed a harsher run-up in unemployment during a challenging economic period.”

The fly in the soup, of course, is that all this is happening at the same time we’re getting a policy shock from America. Trump has broken off trade talks with us – just days before Mark Carney figured we would have some kind of deal. He slapped an additional 10% on those sectors (cars, steel, lumber) were it really hurts. He refused to meet with our PM this week as they both attend the APEC summit. In general he’s being a dork because Ontario created a media message featuring anti-tariff words from Ronald Reagan.

Could Trump walk away from our current CUSMA trade deal in 2026? Would that seriously screw up things in a country where 80% of our trade flows south?

Yes and yes.

Might we regret choking that flow of people and family wealth at a time when GDP takes an orange-guy hit?

Maybe. Dunno. These are interesting and unique times. But let’s be glad Carney is over in Asia hovering up new trade deals instead of sitting in the gilded Oval Office placating a wannabe king who runs a police force that targets brown skin.

On another note, will the Blue Jays be invited to the White House?

About the picture: “Here is a picture of the dog mosaïculture (like a large chia pet) that sits at the entrance near the off-leash dog run of Westmount Park in Westmount, Quebec,” writes Josh. “As it’s the end of the season, its coat is pretty shaggy. Dogs have a lot of political clout in this town, as they should everywhere. I enjoy reading your blog daily – thanks for sharing your thoughts.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/10/28/closing-doors/