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Investing.com - Recent efforts by the Trump administration to curtail immigration have contributed to a moderation in labor force growth, according to analysts at Wells Fargo.
Citing recent data, the brokerage suggested that the foreign-born workforce in the U.S. has declined by an average of 150,000 over the past four months, compared to an increase of 186,000 in the same period last year.
An 88% drop in border encounters versus a year ago, as well as the shuttering of previously available means of gaining temporary parole, have "greatly reduced the pipeline" of workers born outside of the country, the analysts led by Sarah House said in a note to clients.
Meanwhile, the average level of deportations is little changed from the Biden administration’s last year in office, while recent reports of increased apprehensions by immigration authorities suggest that more removals could come in the months ahead, the analysts added.
The stepped-up immigration raids have been a major source of upheaval in recent days, with protests against the crackdown spreading from Los Angeles to Chicago, New York, and other cities across the country.
Immigration has become a key political issue, particularly as people illegally in the country or under parole have represented the lion’s share of a dramatic uptick in the U.S. population born overseas, the Wells Fargo analysts noted.
This surge especially helped to alleviate a shorfall in labor supply in the wake of the COVID-19 pandemic, they said, adding that most foreign-born workers were represented in the agriculture, construction, and services sectors.
"Even if deportations fail to materially ramp up, the near-stalling in immigrant inflows and slower native-born population growth will keep the potential pool of workers historically tight. Thus, the hiring challenges that seemed like an anomaly following the pandemic and even in the late 2010s could increasingly feel like the norm," the analysts wrote.
Still, this weaker supply of workers is tipped to coincide with a possible easing in labor demand, they said, predicting that the unemployment rate would peak at just 4.5% in the year ahead. The jobless rate came in at 4.2% in May.