GDP growth is determined by two factors – changes in productivity and changes in population. As millions of immigrants pour across borders in Europe and the United States, GDP growth is mathematically destined to suffer.

Immigration growth is increasing the population in the largest European countries and the United States.

In Europe immigrants are being prevented from immediately contributing to economic growth by being assigned to processing centers. Government bureaucrats assigned to process refugees are not contributing to GDP growth while they are completing paperwork. This type of immigration increases population while decreasing productivity and hurts GDP growth.

In the United States, most immigrants are not being sent to processing centers. Some are and this presents the same problems as seen in Europe. Many immigrants are instead entering the low-wage work force and as low-wage work increases, average productivity in the U.S. decreases.

Economists have struggled to explain why GDP growth has been slow since the last recession. A simple look at immigration trends explains a large part of the slow growth.

Serious policies are needed to address the problems. If immigrants have a path to move towards high-wage, high-productivity jobs then immigration will be beneficial in the long run. If immigrants are given a path towards government dependence as many are now, then immigration is dooming the world’s leading economies to slow growth.

Michael Carr, CMT, is a subadviser to a mutual fund family and a chartered market technician. To read more Michael Carr, CLICK HERE NOW.