Fed study says US immigration limitations will hurt economy in 2025.
A study from the Federal Reserve Bank of Dallas indicates that the Trump administration’s restrictions on immigration and increased deportations will reduce US economic growth by nearly one percentage point this year. According to an analysis by economists including Pia Orrenius, the significant decline in immigrants at the southern border and heightened deportation efforts for foreign-born workers could reduce gross domestic product by approximately 0.8 percentage points in 2025.
The researchers acknowledged that the limited availability of historical data makes their findings highly uncertain. They examined how five different decreased immigration scenarios would impact GDP and inflation. The biggest impact is expected to be on growth, accompanied by a slight increase in inflation this year due to the new policies.
Immigration at the US-Mexico border saw a significant decrease last year and continued to fall following President Donald Trump’s election. Trump has launched a significant campaign to deport undocumented immigrants and has prompted individuals to depart by eliminating deportation protections for numerous foreign nationals. Researchers found that fewer border crossings — not deportations — are the primary factor impacting growth, responsible for 93% of the projected GDP reduction.
In a scenario involving “mass deportation,” where 1 million immigrants are removed annually by the end of 2027, researchers found that annual GDP growth would be nearly 0.9 percentage points lower by the end of 2025, and 1.5 percentage points lower by the end of 2027. According to a Bloomberg survey, economists anticipate US growth will slow to a 1.5 percent pace in 2025, down from nearly 3 percent in each of the prior two years.
