US Immigration

Magaly · June 21, 2024, 8:02pm

Recently, analysts and even the Fed have significantly focused on the impact of immigration on inflation and economic growth. This discussion will center on developments in this area and their potential long-term effects on productivity and growth.

Article: Net Immigration - InvestmentWiki

Magaly · December 16, 2024, 8:30pm

The immigration surge since 2021 has been one of the largest in U.S. history

Immigration has been recognized as a significant driver of growth and productivity in recent years. It has also contributed positively to easing inflationary pressures by addressing challenges associated with labor shortages.

However, Trump has proposed measures aimed at curbing immigration into the United States. These policies, if implemented, could have both inflationary and recessionary effects, making it essential to closely monitor developments and policy changes in this area.

The Congressional Budget Office (CBO) has already incorporated reduced immigration into its forecasts for the coming years. However, stricter immigration policies could exacerbate this trend, potentially having economic impacts. However, further research is necessary to better understand the potential consequences of such policies on growth, inflation, and labor market dynamics.

Even after adjusting for today’s larger population, the surge is slightly larger than that during the peak years of Ellis Island traffic

Overall, a record 47.8 million immigrants lived in the U.S. in 2023, up from 46.2 million in 2022.

Immigrants accounted for 14.3% of the total U.S. population in 2023 – up roughly threefold from 4.7% in 1970, but still below the record high of 14.8% in 1890.

Magaly · December 17, 2024, 12:24am

Effects of the Immigration Surge on the Federal Budget and the Economy for the 2024-2034 Period

According to the CBO, they expected the net immigration of people in that category to average around 200,000 per year. In the agency’s projections, the net immigration of other foreign nationals exceeds that rate by a total of 8.7 million people over the 2021–2026 period.

After births and mortality and emigration among the surge population are accounted for, the total U.S. population in 2034 is about 10 million people (or nearly 3 percent) greater in CBO’s baseline projections than it is in the counterfactual scenario

Budgetary Effects

The increase in immigration leads to higher federal revenues, along with increased mandatory spending and debt interest, in the CBO’s baseline projections. On balance, this results in a net reduction of $0.9 trillion in deficits over the 2024–2034 period

Economic Effects of the Immigration Surge

The surge boosts total nominal gross domestic product (GDP) by $1.3 trillion (or 3.2 percent) in 2034 and by $8.9 trillion over the 2024–2034 period.

In 2034, real GDP is 2.9 percent greater in CBO’s projections because of the immigration surge.

A $7.8 trillion increase from the larger population.
A $1.5 trillion increase from the greater labor force participation of the surge population.
A $1.1 trillion decrease from the different employment composition of the surge population.
A $0.6 trillion increase from greater productivity related to innovation\
A $0.1 trillion increase from transitory factors.

The surge also boosts the size of the labor force, slightly lowers the unemployment rate, and, initially, reduces average wage growth in CBO’s economic projections.

Inflation is almost unchanged by the surge in immigration. Prices grow more quickly economywide by an average of about one basis point per year because of the surge. The greatest upward pressure on prices comes from increased demand for housing.