A lack of immigration could hurt the economy, new report says

DALLAS — A new report from the Federal Reserve Bank of Dallas shows that a decline in unauthorized immigration could hurt the country’s GDP growth, with little impact on inflation.

Researchers modeled several scenarios of unauthorized immigration through 2028, finding that under a baseline scenario, estimating a decline in unauthorized immigration of about 2.4 million, the annual GDP growth would be about 0.8 percentage points lower in 2025 than under the Congressional Budget Office’s most recent demographic projections. 

Should a “mass deportation” scenario occur, where 1 million unauthorized immigrants are removed every year through 2027, annual GDP growth would drop nearly 1% lower than it would have in 2025, and 1.5% lower in two years. 

All scenarios showed modest effects on inflation, according to the report. 

“These estimates are useful for examining the potential effects of a reduction in net unauthorized immigration,” the researchers wrote. “Our analysis raises the concern that a sharp tightening of immigration policies has the potential to substantially reduce output growth.”

The migration scenarios conducted were based on the Trump administration’s two major policy goals: to stop unauthorized immigration at the border and to conduct mass deportations within the country.

“Given the progress in stopping immigration along the U.S.–Mexico border, we expect the border-inflow component of net unauthorized immigration to remain near zero as it has in recent months,” the report states. “The path of the interior-outflow component, however, is uncertain. Arresting and removing unauthorized immigrants has proven difficult, and Immigration and Customs Enforcement (ICE) is falling short of its numerical targets.”

However, the report adds that ICE just saw an unprecedented funding increase for them to hire more agents, and house and transport more migrants.

The report concludes that this analysis raises concerns that a sharp tightening of immigration policy could substantially reduce output growth. To read the full report, click here.