Immigration is fueling U.S. economic growth while politicians rage

While the rising number of immigrants in the U.S. has sowed division among politicians across the country — and stoked angst among a swath of voters — there’s one place where almost everyone seems on the same, upbeat, page: Wall Street.

Last month, the nonpartisan Congressional Budget Office calculated that immigration will generate a $7 trillion boost to gross domestic product over the next decade. The agency came to that conclusion after incorporating the recent surge in immigration.

The CBO release spurred a flurry of fresh number-crunching among investment bank economists, to account for the boost those new comers are giving to the labor force and consumer spending. Goldman Sachs Group Inc. revised up its near-term economic growth forecasts Sunday. JPMorgan Chase & Co. and BNP Paribas SA were among banks that acknowledged the economic impact from surging immigration in recent weeks.

“Immigration is not just a highly charged social and political issue, it is also a big macroeconomic one,” Janet Henry, global chief economist at HSBC Holdings Plc, wrote in a note to clients Tuesday. No advanced economy is benefiting from immigration quite like the U.S., and “the impact of migration has been an important part of the U.S. growth story over the past two years.”

Morgan Stanley economists Sam Coffin and Ellen Zentner noted this month that faster population growth fueled by immigration lends itself to stronger employment and population estimates than initially thought — though added that the full effect might not be captured by official data.

It’s hard to pin down the exact scale of the inflows of foreign-born people, thanks to many entering without visas or other documentation. But CBO statisticians incorporated data from U.S. Customs and Border Patrol to come up with their higher projected net immigration, according to Morgan Stanley analysis.

Goldman estimates that immigration was around 2.5 million in 2023, a figure that is far above the 1.6 million implied by the change in the foreign-born population in the official household survey from the Census Bureau.

The positive tone among economists contradicts that seen on the campaign trail, as a surge in the number of undocumented immigrants entering the U.S. through the southern border stokes political strife.