President Donald Trump‘s immigration policies are getting a lot of attention from both economists and investors. The new restrictions and plans for mass deportations could have a big impact on the U.S. labor market, inflation, and even the Federal Reserve’s decisions on interest rates. While tariffs have been a big focus in financial discussions, analysts say that immigration policy could end up having an even bigger effect on the economy.
How Does Immigration Affect Economic Growth?
Immigration has been a key driver of labor force expansion and overall economic growth. From 2022 to 2024, an average of 3 million people immigrated to the U.S. annually, contributing to a GDP growth rate of 2.5% to 3%, according to Morgan Stanley. However, under Trump’s policies, this number is projected to fall to 1 million this year and 500,000 in 2026. As a result, GDP growth could slow to 2% in 2025 and 1% to 1.5% in 2026, potentially undermining bullish stock market expectations, Yahoo Finance reported.
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