Immigration Will Boost the US Economy by $7 Trillion Through 2034: CBO
Category: News & PoliticsVia: jbb • 3 weeks ago • 51 comments
By: Matthew Fox (Business Insider)
Matthew Fox 2024-02-08
- The US economy will grow by an extra $7 trillion over the next decade, according to estimates from the CBO.
- The CBO said the additional growth will be driven by an influx of immigrants.
- "More workers mean more output and that in turn leads to additional tax revenue," CBO director Phillip Swagel said.
The US economy will grow an additional $7 trillion over the next decade as a surge in immigration creates a larger labor force and increases demand for goods and services, according to a new estimate from the Congressional Budget Office.
The findings from the CBO reinforce commentary from economists that suggests immigration trends in the US have aided the economy in avoiding a recession, as more workers help boost productivity without causing a spike in wage inflation.
"The labor force in 2033 is larger by 5.2 million people, mostly because of higher net immigration. More workers mean more output and that in turn leads to additional tax revenue," CBO director Phillip Swagel said on Wednesday.
"As a result of those changes in the labor force, we estimate that from 2023 to 2034, GDP will be greater by about $7 trillion and revenues will be greater by about $1 trillion than they would have been otherwise," Swagel added.
The CBO also found that net immigration has risen since 2022, and it expects it to remain elevated through 2026.
The US labor force is expected to surge over the next decade thanks to strong net immigration trends. CBO
America's surge in immigration, while a hot-button political issue, does highlight one of its biggest strengths: its ability to avoid the ticking demographic time bombs of other developed countries, such as Japan, which is facing economic challenges due to its massive aging population.
The CBO said that a large portion of immigrants coming to America are in the prime-working ages of 25 through 54, which tends to benefit the economy significantly as they continue to work for years after their arrival.
Another knock-on effect of America's net immigration trends is its impact on the housing market, since it should result in continued demand for new homes.
"Because immigrants tend to live with family or friends initially and form their own house holds gradually, high rates of immigration from 2022 to 2026 will continue to stimulate construction of new homes during the second half of the 2020s," the CBO said in its outlook report.
Immigration trends are also on the mind of Fed chairman Jerome Powell, who told "60 Minutes" last week that in the long-term, "the US economy has benefited from immigration."
"Immigrants come in and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than Americans do," Powell said.