Trump’s Immigration Crackdown to Slash U.S. Economic Growth, Dallas Fed Warns

A recent analysis conducted by the Federal Reserve Bank of Dallas suggests that the immigration restrictions implemented during the Trump administration may result in a decrease of approximately 0.8 percentage points in U.S. economic growth by 2025. 

Experts, such as Pia Orrenius, examined the effects of reduced immigration and potential mass deportation situations, finding that the significant reduction in border crossings—not deportations—is the main factor contributing to the anticipated decline in GDP.

The research indicates that approximately 93% of the expected economic downturn is attributed to a decrease in the number of immigrants coming to the U.S.

Compared to this, an increase in deportations accounts for the remaining 7%. In a scenario where one million immigrants are removed each year until 2027, the potential impact on GDP growth could be a decline of up to 1.5 percentage points by that time.

Since President Donald Trump took office, immigration levels at the southern border have significantly decreased, and policies that remove deportation protections for specific foreign nationals have further deterred legal immigration. The administration has positioned these policies as essential for safeguarding the nation; however, experts caution that they are leading to notable labor shortages in critical sectors, such as construction, agriculture, and hospitality.

Researchers from the Dallas Fed acknowledged the study's limitations, including gaps in historical data. However, they emphasized a clear trend: they anticipate that a reduction in immigration will impede economic growth and slightly raise inflation.

According to a Bloomberg survey, the U.S. economy is projected to slow down to a growth rate of 1.5% in 2025. 

The Fed’s findings suggest that immigration policy may significantly impact the slowdown, raising essential considerations for long-term economic stability.

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