Economy under threat this year as hundreds of thousands of people leave U.S.

With the U.S. expected to have a population exodus of hundreds of thousands of people, at least 500k individuals, the stability of the economy is on the line.

ICE agents during an enforcement operation in a Chicago household on January 26th, photographed by Christopher Dilts on Bloomberg News.

The population growth of the United States has been expected to decline for this year as President Donald J. Trump's immigration policies have begun to pose a risk to net in-migration as well as the retaining of current members of the population. According to Oxford Press earlier this year, the economy is expected to lose billions in 2025 due to grave tourism declines as a result of foreigners' fears of deportation by the Trump administration. This has already have an impact on tourism as economic growth in that sector slows. Lower rates of tourism would mean lower chances of in-migration as more people from overseas would fear coming to reside in the United States.

Also, the impacts of Trump's deportation laws have begun to have a severe toll on the labor force. Undocumented immigrants, especially in the southwestern United States, constitute a significant share of cheap labor (19.2% of entire labor force), especially in agriculture and manual work; the loss of these sources of employment have contributed and will contribute to higher costs and a shrinking economy as businesses will need to pay greater expenses to pay for citizen workers with employment benefits.

The American Enterprise Institute, a conservative-leaning research organization, admitted that U.S. net migration could reach as low as a loss of 525,000 to a loss of 115,000 for the entirely of 2025, citing "a dramatic decrease in inflows and somewhat higher outflows." Meanwhile, net migration reached almost 1.3 million people in 2024, according to Macrotrends.

Economist Olu Sonola of Fitch Ratings, in reaction to this data among others, warned that, "Population growth helped economic growth… so you’re taking that away… a labour force slowdown… paints a bleak growth and inflation outlook for 2025."

A border patrol arrest taking place, John Moore/Getty.

The Federal Reserve Bank of Dallas has already shown that a mass deportation scenario would slash the 2027 GDP by 1.5 percentage points, while a baseline deportation scenario would reduce the GDP by 0.8 percentage points. So, no matter how much deportations are implemented, a net economic loss would take place.

However, this is not only affecting economic growth; the reduction in labor could lead to higher inflation as well as companies would need to grapple higher costs of labor. Arif Husain of T. Rowe Price estimates that lowering immigration may shrink the labor force by 2.1 million, likely causing wage pressure that pushes inflation higher by mid-2025.

Even Fed chair Jerome Powell, a self-identified Republican hand-picked by Trump in his first term, criticized mass deportations through his statement, "We’re losing thousands and thousands of workers… one of the reasons U.S. economic growth has slowed."