Decline in immigration could affect economy, Dallas Fed study shows

A decline in immigration into the U.S. could impact economic growth in the future, according to a new report from the Federal Reserve Bank of Dallas.

While there was a surge in "unauthorized immigration" from 2021 to 2024, the abrupt decline in recent months has had "negative implications for economic growth," the report shows.

The study looked at potential effects of immigration policy from 2025 through 2027.

According to the study, the decline in immigration began in June 2024 when the Biden administration began restricting migrants' ability to request asylum at the border.

By March 2025, net unauthorized immigration was down 82% from the December 2024 level, from 105,000 to 19,000 per month.

At the beginning of this year, the country was still seeing immigrants come into the labor force, said Pia Orrenius, vice president of research at the Federal Reserve Bank of Dallas and co-author of the report.

According to the study, the Congressional Budget Office projected that 7.3 million "other foreign nationals," unauthorized immigrants or immigrants with some form of quasi-legal status, were added to the U.S. population between 2021 and 2024, compared to the pre-pandemic annual average of about 100,000.

"Most of that is probably petering out now, as well as some of the other immigration policies, like abolishing TPS and humanitarian parole and taking away work permits, or not renewing work permits or not issuing work permits," Orrenius said.

President Donald Trump made immigration a focus of his campaign for a second term, promising to close the border and ramp up deportations. The administration's policies could now be suppressing job creation and labor growth, Orrenius said.

Deportation fears could also be keeping immigrants without legal status from participating in the economy in other ways, she said. They might be too afraid to leave their homes.

"There could be chilling effects where people actually don't leave, they don't self-deport, or they aren't deported, but are less likely to leave their home, less likely to go to church, less likely to go to school, and less likely spend money," Orrenius said.

Xiaoqing Zhou, assistant vice president of research at the Federal Reserve Bank of Dallas and co-author of the report, said there's not only supply side effects, but demand side effects as well.

"When you have less immigrants, it has spillover effects on non-immigrant workers," she said.