Moody's economist links rising native unemployment to Trump-era immigration cuts

Immigration restrictions championed by Donald Trump have led to a historic drop in net international migration, falling from a 2024 high of 2.7 million to roughly 321,000 by mid-2026, according to Census figures, with Brookings suggesting the figure could turn negative this year. Mark Zandi, chief economist at Moody’s, reported that foreign-born unemployment fell beneath native-born unemployment in October 2025, a result of a shrinking immigrant labor force and lower overall labor demand.

He explains that native-born workers now constitute a larger share of the labor market, making them more vulnerable to demand shocks, and that many of the jobs immigrants traditionally fill—such as construction, trucking, and natural-resource work—are low-pay and physically taxing, deterring native workers unless wages rise sharply. The White House spokesperson Kush Desai claims the policy is boosting wages for American workers, a view partially supported by New York Fed data showing wage growth in public administration, construction, and mining. However, Zandi warns that the combination of reduced immigration, tariff-related supply shocks, and the Iran war could produce stagflation, with price increases outpacing output growth, mitigated only by AI advances.