Trump’s Immigration Policies Are Creating a Lasting Drag on Jobs and the Economy

Demographic changes are hitting America hard as the largest generation ever (up until their children) ages into retirement. An aging population is the short story of why everyone is terrified to buy 20- and 30-year European bonds right now, because the simple fact is that healthy long-term economic growth is dependent on having a growing and robust labor force of working age. As the Dallas Fed notes, we saw this demographic change hit America before Trump did, as “In late 2023 and early 2024, when actual payroll growth frequently fell below the elevated break-even estimate, the unemployment rate correspondingly drifted higher.” That is a dynamic that suggests boomers are leaving the labor force for retirement.

But unemployment has not drifted higher in 2025 alongside payroll growth falling below estimates. As Cheremukhin notes, this “provides important external validation for my measure.” He created a methodology from natural population change, legal immigration and net unauthorized immigration represented in that line above which “shows a significantly higher peak in 2023 and a much steeper fall into 2025 compared with series based on official sources.” A different group of analysts at the Dallas Fed earlier this year detailed how “Declining immigration weighs on GDP growth, with little impact on inflation,” combining to create a pretty unsettling reality in plain English for the American economy.

Namely that the tepid jobs numbers this year trend more towards a new normal than an outlier, and the declining economic growth this dynamic brings with it doesn’t even lower inflation either. This is not some abstract economic dynamic constrained to a Fed paper, you can see it for yourself in farmers on the verge of bankruptcy amidst all time high beef prices and inflation persisting around 3 percent while the Fed says they fear inflation risks to the upside, signaling that they may be cautious in further cutting rates to try to spur our slowing economy. The combination of Trump’s policies leads to lower growth and higher inflation, which when combined with persistent unemployment can create stagflation, the worst thing that can happen to an economy.

But the…good news? I guess? Is that this new Dallas Fed paper suggests that the tepid jobs growth we are currently experiencing is actually enough to keep the unemployment rate constant and us away from stagflation. It’s just one paper zooming in on a new two-year dynamic, but that it spans across two very different presidencies seeing different unemployment trends makes it significant. That there are external confirmations for Cheremukhin’s methodology make this a pretty compelling and bleak depiction of what the American economy actually looks like going into 2026. The poor jobs numbers that drive Trump mad and make Wall Street nervous are actually good enough after all.

Immigration is an economic superpower. It’s what separates America from the rest of the world. Last year the Congressional Budget Office found that “An increase in immigration over the 2021–2026 period boosts federal revenues as well as mandatory spending and interest on the debt in CBO’s baseline projections, lowering deficits, on net, by $0.9 trillion over the 2024–2034 period.” If you can get a steady flow of the globe’s best and brightest, you are less subject to the swings of population trends inside your borders. Only a doofus who knows literally nothing about economics would think that less immigration is good for our economy long-term, yet here Republicans are bankrupting their own voters and betraying them for Argentina as they prove themselves to be economic frauds time and time again.

If decreased immigration’s impacts on the labor market are lasting, that means America’s economic engine has lost horsepower. We could still grow the economy to degrees we have in the past, which is the great hope/lie of AI, but without growth in the labor force and the natural feedback loop that creates with spending that gets recycled through the economy, economic growth without bringing inflation along with it becomes more difficult to accomplish. If you are piling 1934-stuyle tariffs on top of that dynamic, it is akin to pouring stagflationary gasoline on a fire that can stay lit long after Trump has left office depending on how much the rest of the word hates us now.

America used to be the immigration capital of the world, now that’s not so certain given how one party here has made it clear they are fine throwing the rest of the world in foreign gulags if they travel here. Immigration is (was?) our economic secret weapon. Now the nativist GOP wants America to look more like nativist aging Europe whose long-term bonds have fewer buyers today than they did yesterday every day, bringing depressed European economic growth and its lack of long-term investment over the Atlantic. This year’s economic trends fueled by changes in immigration have proven that it is not at all inaccurate to say that the Trump and his enablers like racism more than they like money, and they may have permanently damaged the economy because of it.