In this episode of "Thoughts on the Market," Michael Gapen and Sam Coffin discuss the economic consequences of the administration's shift in immigration policies, focusing on the U.S. labor market and implications for Federal Reserve policy. They analyze recent data on border encounters and interior removals, noting a sharp fall in encounters and challenges in interior removals, potentially leading to increased ICE raids. The conversation covers the impact of ending the CHNV parole program and temporary protected status (TPS), estimating a significant drop in net immigration, which will lead to slower population and labor force growth. This shift is expected to affect the unemployment rate, potential GDP growth, and labor force participation, with a possible chilling effect on undocumented workers' participation. The hosts conclude by discussing how these factors influence the Federal Reserve's policy decisions, anticipating later but more substantial rate cuts due to the combined effects of tariffs and immigration controls.
