Goldman Sachs warns: Trump's immigration policy will hinder U.S. economic growth
Goldman Sachs warned that Trump's immigration policy will have a negative impact on the U.S. economy and labor force growth, with net immigration expected to drop to 750,000 people per year, resulting in a GDP growth rate decline of 30-40 basis points. The net number of illegal immigrants is expected to be zero, which may severely impact specific industries, but has limited effects on inflation. Goldman Sachs analysts pointed out that the loss of illegal immigrants could cause greater harm to the economy
According to a research report released by Goldman Sachs on Monday, U.S. President Donald Trump's immigration restrictions will have a certain negative impact on the U.S. economy and labor force growth, while the impact on inflation will be more limited.
Goldman Sachs predicts that in the baseline scenario, the net number of immigrants to the U.S. will plummet to 750,000 per year, causing this year's potential GDP growth rate to decline by 30-40 basis points (0.3-0.4 percentage points). According to data from the U.S. Census Bureau, 2.8 million people immigrated to the U.S. last year.
The composition of immigrants will also change, with Goldman Sachs estimating that the net number of illegal immigrants will be zero, as 500,000 are deported each year, offsetting the estimated number of asylum seekers and other entrants.
Trump has begun to fulfill his promised measures to crack down on immigration, increasing the detention and deportation of immigrants, and has already sent a large number of illegal immigrants back to countries such as Colombia and India.
Goldman Sachs analyst Jan Hatzius stated that in more extreme cases, if the crackdown leads to illegal immigrants "daring not to go to work, or employers daring not to hire them, then the economic consequences will be more severe." However, overall, the impact on inflation should be limited.
Goldman Sachs estimates that illegal immigrants account for about 5% of the total U.S. labor force, with this proportion expanding to one-fifth in specific industries such as landscaping and construction services.
Analysts wrote: "The sudden loss of these workers could cause severe disruption in many industries and have a greater impact on inflation."
In the past five years, over 5 million foreign workers have joined the U.S. labor force. Immigration has driven remarkable growth in the U.S. labor market and helped increase employment numbers. Goldman Sachs stated that this impact will weaken in the future