Quick Bytes
- CBO projects U.S. deficit to rise from $1.6 trillion in 2024 to $2.6 trillion by 2034.
- Increased immigration expected to expand the labor force and boost economic growth.
- Net immigration to make the potential labor force 2.7% larger by 2027 than previous estimates.
- Immigrants’ spending, especially in housing, contributes significantly to the economy.
Understanding the Economic Impact of Immigration
The Congressional Budget Office’s recent report presents a dual perspective on the U.S. economy’s future, highlighting a concerning rise in the national deficit alongside the positive economic influence of immigration. The deficit is projected to increase significantly over the next decade, but this is counterbalanced by the anticipated growth in the labor force due to immigration, particularly among those in their prime working years.
Labor Force Expansion and Economic Growth
Immigration is set to play a crucial role in expanding the labor force through 2026, mitigating the effects of an aging population. The CBO’s updated figures suggest a 2.7% larger potential labor force by 2027, with high rates of net immigration contributing to an average 0.2 percentage point increase in annual real GDP growth rate over the next ten years.
Immigrants’ Contribution to the Housing Sector
The economic contributions of immigrants extend beyond labor force numbers. Their spending power, particularly in the housing market, is expected to drive demand for new homes well into the late 2020s. This spending is a vital component of the broader economic growth, as highlighted by both the CBO and Federal Reserve Chair Jerome Powell.
The Bigger Economic Picture
While the rising deficit poses a significant challenge, the influx of immigrants is poised to shape America’s economic landscape positively. Their role in the labor market and sectors like housing is a testament to the broader economic benefits of immigration, as acknowledged by economic authorities.
