The Congressional Budget Office (CBO) anticipates a substantial uplift to the US economy, projecting a $7 trillion surge in the next decade propelled by increased immigration. The surge is poised to enhance the labor force and drive demand, contributing to stronger economic growth. According to the non-partisan agency, this surge will also lead to approximately $1 trillion in additional federal government revenues over the same period.
While the expansion in migration is expected to fuel economic growth by amplifying demand for goods, services, and housing, the CBO notes that the impact on wages may be tempered. The slower rise in wages is attributed, in part, to the influx of lower-skilled workers into the labor market.
The influx of migrants primarily comprises individuals entering the US illegally and those released by Customs and Border Protection officials through humanitarian parole or a notice to appear before an immigration judge. Following a lag, many of these migrants integrate into the workforce.
This CBO report emerges amidst a heated political discourse in Washington regarding the surge in migration at the US-Mexico border and the ensuing policy considerations. A recent Senate decision dealt a blow to attempts to implement new border restrictions, challenging a bipartisan compromise supported by President Joe Biden.
Federal Reserve Chairman Jerome Powell, in a recent interview, acknowledged the historical benefits of immigration to the US economy. The CBO echoes this sentiment, projecting that the surge in immigration will contribute to an average annual growth of 0.2 percentage points in inflation-adjusted GDP from 2024 to 2034, making the economy roughly 2% larger in 2034 than projected otherwise.
Despite the economic benefits, the CBO anticipates downward pressure on average inflation-adjusted wages due to the expanded workforce, particularly in lower-paying jobs. While this effect is expected to partially reverse after 2027, wages are projected to be slightly lower than otherwise in 2034.
The CBO acknowledges the uncertainty in population projections, especially in later years, assuming that the surge in immigration observed since 2022 will continue through 2026 before subsiding. However, the report does not factor in housing and other costs incurred by states and localities due to the migration surge.
CBO Director Phil Swagel refrained from commenting on congressional efforts to regulate migrant inflows, emphasizing the agency’s focus on economic projections rather than broader societal impacts.
Source: MSN
