Experts from the Federal Reserve Bank of Dallas, Brookings Institution, and PIIE Warn of Economic Impact
Researchers from the Federal Reserve Bank of Dallas and experts from the Brookings Institution and Peterson Institute for International Economics (PIIE) agree that massive deportations of undocumented migrants in the United States will negatively affect the country’s economic growth capacity.
Diverse Projections, Common Concern
While their projections vary based on the scenarios they consider, all three groups concur that between now and 2028, the labor market will be impacted, causing a loss of between 0.4 and 2.7 percentage points in the GDP growth rate.
Anti-Immigrant Policies Harm Key Economic Sectors
According to these experts, anti-immigrant and deportation policies harm businesses and households, affecting crucial economic sectors such as agriculture, services, and durable goods manufacturing. These sectors have high migrant labor participation.
Migrant Workforce Contribution
An analysis by the Dallas Fed, titled “Declining Immigration Weigh on GDP Growth with Little Impact on Inflation,” highlights that between 2021 and 2024, approximately 7.3 million foreign nationals with illegal status entered the US.
As a result of anti-immigrant policies implemented by the Trump administration, researchers estimate that between 2021 and 2028, around 2.4 million undocumented migrants will return to their home countries. This would lead to a decrease in the GDP growth rate between 0.8 and 1.4 percentage points.
Federal Open Market Committee’s GDP Projections
The Federal Open Market Committee estimated in its June monetary meeting that the US GDP will grow by 1.4% in 2021, increasing to 1.6% in 2026 and 1.8% in 2027.
PIIE’s Worst-Case Scenario
Led by Warwick McKibbin, Megan Hogan, and Marcus Nolan, PIIE’s research considers three deportation scenarios to measure their impact on the economy. In the worst-case scenario, annual mass deportation of 1.3 million migrants would reduce the GDP growth rate by up to 2 percentage points from 2025 to 2028.
“Given that the annual GDP growth rate is approximately 1.9%, this implies that the economy will not grow at all during Trump’s second administration due to the negative effects of deportation policies.”
Brookings Institution’s Projection
The Brookings Institution projects that mass deportations of migrants and restrictive immigration policies will reduce the US GDP by 0.4 percentage points annually.
They note that “the economic consequences of massive deportations will be disruptive and unpredictable.” The Brookings Institution anticipates that US employment will stabilize but remain below pre-Trump administration levels.
Key Questions and Answers
- Q: How will mass deportations affect the US economy? A: Experts from the Federal Reserve Bank of Dallas, Brookings Institution, and PIIE warn that mass deportations will negatively impact the US economy, reducing the GDP growth rate by between 0.4 and 2.7 percentage points.
- Q: Which sectors will be most affected by deportations? A: Key economic sectors such as agriculture, services, and durable goods manufacturing, which heavily rely on migrant labor, will be significantly affected.
- Q: How many migrants are estimated to return to their home countries? A: Researchers estimate that between 2.4 million and 1.3 million undocumented migrants will return to their home countries between 2021 and 2028, depending on the deportation scenario.
- Q: What are the projected GDP growth rates for the US? A: The Federal Open Market Committee projects a 1.4% GDP growth rate for 2021, increasing to 1.6% in 2026 and 1.8% in 2027.
- Q: What are PIIE’s worst-case scenario projections? A: In their worst-case scenario, PIIE projects that annual mass deportation of 1.3 million migrants would reduce the GDP growth rate by up to 2 percentage points from 2025 to 2028.
- Q: How will US employment be affected by deportations? A: The Brookings Institution anticipates that US employment will stabilize but remain below pre-Trump administration levels.
