Fed Chair Says Trump Immigration Policies Slowing Economic Growth

At a Congressional hearing, Federal Reserve Board Chair Jerome Powell said the Trump administration’s deportation policies are one of the reasons U.S. economic growth has slowed. The comment confirms the views of economists who warned it would be challenging to grow the economy with an immigration policy focused on removing workers from the U.S. labor force. According to a recent Quinnipiac poll, 56% of registered voters disapprove of “the way Donald Trump is handling deportations,” and 40% approve.

Fed Chair Asked About Immigration At A House Financial Services Hearing

On June 24, 2025, at a House Committee on Financial Services hearing, Rep. Maria Salazar, a Republican representing the Miami area, asked Jerome Powell about economic growth in light of the Trump administration’s efforts to lower the labor supply through deportations. Salazar began by stating she supported the president’s goal of deporting undocumented immigrants “who are criminals” but differentiated them from average workers.

“We’re losing thousands and thousands of workers, what the ICE [Immigration and Customs Enforcement] leadership has called collateral damage,” said Salazar. “Most of the people are working in three main sectors—construction, hospitality and agriculture.” On May 30, 2025, ICE arrested more than 100 construction workers in Tallahassee, Florida. ICE publicized the arrests, with many men put into custody while building an apartment complex near Florida State University.

“We’re talking about 15% of the economy—construction, hospitality and agriculture,” said Salazar. She asked: What is the growth effect on the economy if these types of removals—“these hands are removed from these sectors”—continue?

At first, Powell deflected the question by noting, “Immigration is another area where nobody put us in charge,” and said the Congressional Budget Office had assessed immigration policy.

Salazar followed up and asked what affects economic growth. “There are two things that affect growth,” said Powell. “One is growth in the labor force, more people working, and the other thing is productivity, how much do they produce per hour of work. And when you significantly slow the growth of the labor force, you will slow the growth of the economy.” He reiterated it was not the Federal Reserve’s job to have a view on immigration policy.

Salazar asked, “You do agree that if we don’t have those hands, then we don’t grow?”

Powell replied, “I think that growth will slow and actually is slowing this year, and that’s one of the reasons.”

The Trump Administration’s Immigration Policies Are Expected To Continue

In a November 2022 speech, Jerome Powell said that a contributing factor to inflation was the “labor supply shortfall,” noting, “The combination of a plunge in net immigration and a surge in deaths during the pandemic probably accounts for about 1-1/2 million missing workers.” (Some economists placed the number of missing workers higher.) Donald Trump enacted several policies during his first term that reduced the immigration flow, including restrictions against refugees, temporary visa holders and family-sponsored immigrants.

“Increasing our ability to produce by increasing the supply of labor is the least painful way to control inflation,” according to Mark Regets, a labor economist and a senior fellow at the National Foundation for American Policy. He notes that inflation occurs when the demand for goods and services grows faster than supply.

While advocates of more restrictive immigration policies hope removing workers from the economy will raise wages for U.S. workers, economic research calls that into question, particularly if one focuses on real wages or “how much money an individual or entity makes after adjusting for inflation.” Economists explain that by increasing the labor supply, immigrants help tame inflation and contribute to higher economic growth. Lower inflation raises real wages for U.S. workers, while economic growth is essential for Americans to achieve a higher standard of living.

Salazar noted that the president tweeted about the potential negative impact of arresting productive workers. Trump announced on social media, “Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace.” Reuters reported, “ICE issued guidance that day pausing most immigration enforcement at agricultural, hospitality and food processing businesses.”

However, a few days later, DHS reversed the policy, stating, “Worksite enforcement remains a cornerstone of our efforts to safeguard public safety, national security and economic stability.” Stephen Miller precipitated the arrests and later protests in Los Angeles by exhorting ICE officials, ‘Why aren’t you at Home Depot? Why aren’t you at 7-Eleven?’”

It appears Miller, not Trump, decides the administration’s immigration policy. Stephen Miller set a quota of 3,000 daily arrests to achieve one million deportations a year. Administration officials have found that meeting that target requires arresting anyone ICE officers can get their hands on since there are not enough immigrants with criminal convictions to meet the quota. In Ontario, California, ICE officers arrested two men while they were mowing the lawn. “They left the lawnmower running right here on the front lawn,” said the homeowner.

The Trump administration is also reducing the labor supply through other means. The administration has blocked the admission of refugees, terminated Temporary Protected Status for several countries and removed work authorization for up to 528,000 people by ending the humanitarian parole program for Cubans, Haitians, Nicaraguans and Venezuelans. If the GOP reconciliation bill becomes law, ICE detention capacity will increase dramatically, along with the number of agents, leading to more arrests and deportations than seen to date.

Near the end of her five minutes, Rep. Salazar returned to immigration and asked the Fed Chair whether there would likely be enough workers to fulfill the labor needs of the U.S. economy over the next ten years. Powell said, “I think labor economists do observe the phenomenon you’re talking about, which is, is demand for labor going to be met by the domestic population, the native-born population, and the answer appears to be: Probably not over the next ten years.”