Dallas Federal Reserve Research: Immigration Restrictions in 2025 May Damage the US Economy by 0.8%

The Zhitong Finance App learned that the Dallas Federal Reserve's latest research shows that immigration restrictions and enhanced eviction measures implemented by the Trump administration may reduce the US economic growth rate by nearly 1 percentage point in 2025.

An analysis by the research team led by economist Pia Orrenius indicates that the drastic reduction in the number of immigrants on the southern border of the United States and the intensification of evictions against foreign workers may reduce the US gross domestic product (GDP) by about 0.8 percentage points in 2025.

The researchers acknowledge that due to limited historical data, there is great uncertainty about their findings. They examined the impact of five different immigration reduction scenarios on GDP and inflation, and found that these new policies hit economic growth the hardest, while boosting inflation slightly this year.

The number of immigrants at the U.S.-Mexico border dropped sharply last year, and continued to decline after Trump was elected president. Trump has initiated mass evictions of undocumented immigrants and prompted many expatriates to leave the US by lifting deportation protections.

Researchers have found that the reduction in the number of people entering the border (rather than evictions) is the biggest driver of the economic downturn, and is expected to account for 93% of the GDP decline.

The study also pointed out that under the “mass eviction” scenario — that is, expelling 1 million immigrants per year by the end of 2027 — the US annual GDP growth rate will drop by nearly 0.9 percentage points by the end of 2025, and by 1.5 percentage points by the end of 2027.

According to a Bloomberg survey, economists expect the growth rate of the US economy to slow to 1.5% in 2025 from close to 3% in the past two years.