Morning market minute: Net immigration, population growth and U.S. employment

REAL ECONOMY BLOG | January 10, 2025

The U.S. December employment report will most likely show a net increase of 180,000 jobs with the risk of a stronger print because of seasonal fluctuations, a post-hurricane rebound in hiring as well as solid gains in government, health care, education, and leisure and hospitality,

The unemployment is expected to stay at 4.2% in Friday’s data.

The report comes on the eve of the second Trump administration and the prospect that it will adopt policies that could have a profound impact on the labor market, particularly if the administration follows through on its promise to engage in widespread deportations.

Data compiled by the Congressional Budget Office and the Brookings Institution point to the recent importance of immigration to the American economy as baby boomers retire and leave the workforce. Put simply, without immigration, the U.S. population is likely to shrink.

The impact of immigration on the economy has been evident over the past two years.

Between January 2022 and October 2024, the Census Bureau’s Current Population Survey estimated that the immigration population rose by 3.94 million. In contrast, the CBO estimated that the U.S. population overall had a total increase of 8.65 million over that same interval.

This influx of immigrants is one of many reasons why the U.S. economy has grown by nearly 3% over the past two years and firms have been able to meet that demand by drawing on foreign-born labor.

It is also why there is an increasing focus on the unemployment rate for recent immigrants, which stands at 7.6% in contrast with 3.8% for natives and 3.3% for non-recent immigrants.

This all implies that should the incoming administration follow through on its promise to step up deportations, there is a risk to the wage and inflation outlook through lower unemployment, particularly in the agricultural, technology, leisure and hospitality, and industrial sectors.

This article was written by Joseph Brusuelas and originally appeared on 2025-01-10. Reprinted with permission from RSM US LLP.
© 2024 RSM US LLP. All rights reserved. https://realeconomy.rsmus.com/net-immigration-population-growth-and-u-s-employment/

RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent assurance, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/about for more information regarding RSM US LLP and RSM International.