Federal Reserve Chair Credits Illegal Immigrants for Boosting US Economy

Federal Reserve Chairman Jerome Powell attributes the strength of the US economy to the influx of millions of illegal immigrants who have joined the workforce, alleviating labor shortages and contributing to economic growth, despite the Biden administration's challenges in detaining and processing these individuals. The context is the ongoing immigration crisis at the southern border, with significant implications for the US labor market, economic growth, and fiscal policy. This description focuses on the primary topic of the article (the impact of illegal immigration on the US economy), the main entities involved (Jerome Powell, the Biden administration, and illegal immigrants), the context of the immigration crisis, and the significant actions and implications related to the subject matter. The description also provides objective and relevant details that will help an AI generate an accurate visual representation of the article's content.

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Nitish Verma
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Federal Reserve Chair Credits Illegal Immigrants for Boosting US Economy

Federal Reserve Chair Credits Illegal Immigrants for Boosting US Economy

Federal Reserve Chairman Jerome Powell stated that the millions of illegal immigrants released into the United States from the southern border since 2021 have positively impacted the US economy by joining the workforce and alleviating labor shortages. Powell made these remarks at a banking event in Amsterdam on Tuesday, where he also discussed inflation and interest rates.

Why this matters: The impact of illegal immigration on the US economy has significant implications for the country's labor market, economic growth, and fiscal policy. As the US continues to grapple with immigration reform, understanding the economic effects of illegal immigration will be crucial in shaping policy decisions that affect millions of Americans.

Powell said, "We're still getting very substantial numbers of people coming into the country and going to work... They are getting work permits and they go to work and they're paying taxes and they're creating economic output and there are millions of them." The Fed chair attributed the strength of the US economy to immigration, saying it has "taken the edge off" last year's tight labor markets and added to the economy as consumers.

Since President Joe Biden took office in January 2021, 6 million migrants have illegally crossed the southern border, according to U.S. Customs and Border Protection. The Biden administration has not publicly disclosed how many of those migrants were released into the country rather than removed. However, 1.3 million people have sought asylum and are awaiting a decision, allowing them to work legally in the meantime, per data from the Transactional Records Access Clearinghouse at Syracuse University. Additionally, over 400,000 migrants from Cuba, Haiti, Nicaragua, and Venezuela have obtained work documents through a Biden-era parole initiative since January 2023.

Powell expects the US economy to grow about 2% this year, slightly above the Fed's estimates of the economy's underlying potential, with a labor market that is easing slightly but remains strong. Despite this, the Fed chair expressed reduced confidence in his expectation that inflation will decline through 2024, citing recent data showing producer prices rose more quickly than expected in April. However, Powell believes it is unlikely that the Fed will raise interest rates again, instead opting to hold the policy rate steady and allow it to have its full impact.

The Biden administration's inability to detain all apprehended migrants has led to their release into the country, where they may remain through court proceedings, which can take several years. Those who claim asylum may obtain a document allowing them to work legally while awaiting a decision. Powell emphasized that these individuals are paying taxes, creating economic output, and consuming goods and services, ultimately contributing to the growth of the US economy.

Key Takeaways

  • Fed Chair Jerome Powell says illegal immigrants have positively impacted the US economy by joining the workforce.
  • 6 million migrants have illegally crossed the southern border since 2021, with many obtaining work permits.
  • Powell attributes the strength of the US economy to immigration, which has eased labor shortages.
  • He expects the US economy to grow 2% this year, with a strong labor market and steady interest rates.
  • Illegal immigrants are paying taxes, creating economic output, and consuming goods and services, contributing to US economic growth.