Trump's immigration crackdown could remove $240B consumer spending from US economy

Economists are warning that President Donald Trump’s tough immigration policies will cost the United States about $240 billion in economic output, as fewer people living in the country means less money being spent.

Analysts at S&P Global Ratings say the country’s economic growth will take a hit of between half a percentage point and a full percentage point from the middle of this year through the middle of next year. With the US economy valued at $23.8 trillion, that drop translates to somewhere between $119 billion and $238 billion in lost growth over a 12-month stretch as reported by The Telegraph.

Satyam Panday, who leads US economic analysis at the agency, explained the problem in straightforward terms. “It’s the pure population growth numbers,” he said. “If you don’t have that many people renting, if you don’t have that many people to spend on groceries, that is taking off from overall GDP growth.”

Trump campaigned on launching what he called the “largest deportation operation in American history,” and he has moved quickly since taking office in January. Immigration authorities have already removed more than 400,000 people from the country since the year began. The Department of Homeland Security expects that number to reach nearly 600,000 by the time 2025 ends.

The president has gone beyond targeting people without proper documentation. In late September, he announced a new $100,000 charge for anyone coming to work in America on an H-1B skilled worker visa. The technology industry, which depends heavily on these visas to bring in talent, has been thrown into confusion by the change.

Immigrant population shrinking rapidly

Panday’s economic calculations assume that the number of new immigrants coming into the country, minus those leaving, will crash from a record high of 2.8 million people in 2024 down to just 400,000 or 500,000 per year.

But the actual numbers might be even worse than that. “What we are seeing right now is actually close to zero, so we may be actually a little bit too positive on what we are thinking,” Panday said.

Another research group, the American Enterprise Institute, thinks the situation could get even more severe. They predict net immigration could fall to between 115,000 people and actually go negative to minus 525,000 this year.

Numbers from the Census Bureau studied by the Pew Research Center show that more than a million immigrants have already left the country since January started. Many foreign-born workers are choosing to leave on their own rather than face the president’s strict enforcement measures.

Key industries face labor shortages

Beyond reduced shopping and spending, industries like farming and construction will feel the pain. These sectors depend on workers born in other countries and will likely struggle to grow when they cannot find enough employees. As reported by Cryptopolitan previously, data centers backed by billion dollars investments are also facing workforce shortage.

Research firm Capital Economics believes the immigration restrictions will hurt the economy more than Trump’s widespread import taxes. However, the damage will be partially balanced by advances in artificial intelligence, which should help businesses work more efficiently.

S&P Global Ratings now expects the economy to grow 1.9% this year and 1.8% next year, both well below the 2.8% average rate seen recently.

Panday also noted that the chance of a recession hitting within the next year has climbed to between 25% and 30%, roughly twice the typical 13% risk level.

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