Why an Immigration Surge Saved the US Economy: JPMorgan AM


1. The US immigration influx helped prevent a recession


JPMAM report final 1



JPMorgan Asset Management


Many in markets are still mystified as to how the US economy managed to keep expanding despite multi-decade-high inflation and an unprecedented surge in interest rates.

For a while, Kelly couldn’t figure out whether there would be a recession, given how mixed signals were muddying the waters. Most economists now agree that there won’t be a downturn, but one of the main explanations Kelly gave as to why may be shocking.

“We are seeing an immigration surge, which in many ways, of course, is chaotic, and people talk about it as one of our greatest problems,” Kelly said. “But oddly enough, there is a silver lining that it’s adding strength to the economic outlook.”

It’s unclear exactly how much the US population grew last year, since official government data lags by many months and doesn’t account for undocumented immigrants.

Over 545,000 people gained lawful permanent resident status in the first half of 2023, according to the latest data from the US Department of Homeland Security, though less than half were new arrivals. Meanwhile, data cited by the nonpartisan Pew Research Center shows there were nearly 250,000 encounters with undocumented migrants in December alone — a record high.

The number of new foreign-born workers over 16 in the US was the highest since at least 2008, according to JPMAM data. Kelly said many of these people found jobs in lower-wage industries like hospitality and retail, or gigs like day care, landscaping, or lawn services.

“There are a lot of low-wage jobs that are now being filled by immigrants,” Kelly said. “And that job growth is actually helping the economy sustain — job growth that we have that we didn’t think we could do a year ago.”

Besides adding jobs, which tends to boost economic growth, Kelly noted that the presence of cheap workers has kept a lid on wage growth and, by extension, inflation.

JPMAM’s strategy chief was careful to avoid making political statements or prescribing policies, though he’s confident the influx of inexpensive workers helped fuel growth and limit inflation.

“I do want to emphasize: I think the current system is chaotic,” Kelly said. “But you could say that it has widened the runway for the soft landing. It’s made it easier for us to achieve a soft landing.”



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