The Trump administration's crackdown on illegal immigration has resulted in an80% collapse in net immigration to the USA,and has fundamentally altered the mathematics behind the nation's labor supply to the point wherethe level of job growth needed to maintain economic stability is now far lower, according to a new Goldman analysis.

After a flood of more than 10.8 million illegal immigrants (official figure) entered the United States under Biden, net immigration - both legal and illegal - has gone from roughly one million people per year in the 2010s to around 500,000 in 2025, with a further drop to just 200,000 projected by Goldman for 2026.This has sharply reduced labor-force growth and lowered the economy's "breakeven" pace of job creation,the bank opines.

Here's Goldman vs. Brookings vs. the Congressional Budget Office on net immigration:

Now,the US will only need around 50,000 new jobs per monthby the end of this year to keep the unemployment rate from rising, down from roughly70,000 today.

At the same time, Goldman says labor demand still looks "shaky"because job growth is narrowand job openings are trending lower - with the main downside risk being afaster, more disruptive AI-driven adjustmentthat could tamp down hiring or raise job losses beyond current estimates.

Elevated deportations, tighter visa / green-card policies, a pause in immigrant visa processing that affects dozens of countries, and the loss of Temporary Protected Status for some groups, Goldman suggests there is additional downside risk to the workforce.

Of course, new math on the labor supply doesn't mean the labor market is strong(duh)... In fact, Goldman describes demand as “shaky,” writing thatjob growth has become increasingly narrow - dominated by healthcare - and that job openings have continued to fall. Openings are now aroundseven million, below pre-pandemic levels and still declining.

Because fewer new workers are entering the economy, hiring no longer needs to run as hot to prevent unemployment from drifting higher. “A small pickup is all that should be needed to sustain job growth at the breakeven pace,” according to the report, arguing thatweaker-looking payroll numbers may increasingly mask a labor market that is merely treading water rather than deteriorating.

Official data from theBureau of Labor Statisticsshow a similar trend,with job openings drifting toward the mid-six-million range late last year. A continued slide in openings, Goldman warns,would increase the risk that unemployment rises more meaningfully, even with slower labor-force growth.

There is also a risk that tighter immigration enforcement is pushing more workers into informal or off-the-books employment. If so, official payroll data could understate the true level of labor-market activity, complicating the Federal Reserve’s task of gauging economic momentum.

Source: ZeroHedge News