An article by Abagail Hauslohner and Andrew Ba Tran  in today’s Washington Post provides evidence that Trump administration policies are not only slowing the rate of illegal immigration, but of legal immigration as well. A slowdown in immigration will inevitably impact the administration’s ambitious efforts to spur the growth rate of GDP.

Even without taking immigration into account, U.S. economic growth faces daunting demographic headwinds in the decades ahead. A post I wrote for SeekingAlpha early last year detailed three major demographic trends that have turned unfavorable to growth:

  • A slowdown in the overall rate of population growth from over 2 percent per year in the 1960s and 1970s to about 0.3 percent today. In coming years, deaths will begin to exceed births.
  • A rise in the dependency ratio (the ratio of the non-working-age population to the working-age population) from about 0.48 as recently as 2010 to 0.58 by 2025.
  • A reduction in women’s labor force participation, which peaked at about 60 percent at the turn of the century but has now fallen to about 58 percent.

According to data from the Pew Research Center, immigration accounted for about half of the growth of the U.S. population over the past half century. Without immigration, population growth is expected to turn negative over the next 50 years.

According to the Pew report, immigration contributes to economic growth in three ways. First, it increases the rate of population growth as a whole. Second, it has a favorable impact on the dependency ratio, since immigrants are on average younger than the native-born population. Third, the educational level of immigrants has been trending up, boosting productivity growth.

The administration talks boldly of returning U.S. economic growth to rates in the 3 to 4 percent range, last experienced on a sustained basis 50 years ago. Falling immigration rates, added to other demographic headwinds, make such a growth target increasingly implausible.