Dallas Federal Reserve President Robert Kaplan says that the Immigration and Customs Enforcement (ICE) crackdown on immigrants is already hurting the United States economy and that the harm will only grow worse over time. Speaking at the Council on Foreign Relations, Kaplan said that immigrants “are not going out and shopping, they are staying home, they are afraid if they go out they are not coming home.” Long Island Latino communities are already seeing the impact, with business activity slowing dramatically whenever ICE raids are underway.
Kaplan told the Council on Foreign Relations that frightened immigrants are more likely to save than to spend. As immigrants prepare for the possibility of deportation, they are reducing their spending to provide a cushion in case of arrest and deportation. Many are transferring their money to financial institutions in their home countries. The drop in spending and the offshoring of savings will depress the consumer goods sector.
Kaplan also warned that with an aging United States citizen population, immigrants are playing a greater role in filling jobs. With unemployment at a very low 4.4%, employers say they are having a hard time finding candidates for job openings. Mark Zandi, chief economist at Moody’s Analytics, says that Trump’s policies may result in a 25% drop in net immigration to the United States. That decrease will further limit the ability of companies to respond to global economic opportunities.
Although the Trump policies are often touted as being directed against undocumented immigrants, they have both direct and indirect effects on legal immigration. Permanent residents whose family members are deported may well decide to return to their home country. Nearly a million immigrants with Temporary Protected Status (TPS), who fear they will face deportation next year, are beginning to plan to transfer their assets to their countries of origin. Highly educated tech and medical specialists are already reconsidering whether they want to immigrate to a country with a president who is openly hostile to their interests.
The damage is already being done, but it will only get worse.