Policymakers are increasingly attributing the robust performance of the U.S. economy in 2023 to an influx of immigrants and a strengthened labor force.
Despite widespread predictions of a recession, the U.S. economy demonstrated resilience last year, with real gross domestic product (GDP) expanding by 2.5 percent, unemployment remaining below 4 percent, stock markets and corporate profits reaching record highs, and inflation decreasing significantly.
While the infusion of liquidity and substantial fiscal stimulus measures deserve credit for averting a downturn, experts are recognizing the contribution of immigration in bolstering the labor force, a factor that was previously underestimated.
During a recent event, Federal Reserve Chair Jerome Powell highlighted immigration as a key factor in explaining the unexpected economic growth.
Conflicting immigration data from various government sources may explain why the labor market consistently surpassed expectations and exhibited robustness. Job creation in March, for instance, far exceeded projections, reaching 303,000 new jobs, while the employment rate rose to 96.2 percent.
Estimates from the Census Bureau for 2023, which inform the Fed’s monetary policy decisions, indicate a population increase of 1.7 million, with immigration accounting for about 70 percent of this growth.
However, recent projections by the Congressional Budget Office (CBO) suggest a much higher figure, with 3.3 million immigrants arriving in the U.S. last year, leading to growth rates exceeding 1 percent. CBO forecasts indicate a significant surge in net immigration currently underway in the United States.
