Why the Fed is thinking about immigration
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What is the main topic discussed in this episode?
On the program today, we'll take another couple of passes at the Fed meeting. We'll talk China for a bit. And AI comes to your recycling bin. From American Public Media, this is Market Class.
In Los Angeles, I'm Kai Rizdal. It is Thursday today, the 11th of December. Good as always to have you along, everybody. As usually happens, Chair Powell covered a lot of ground in his post-meeting press conference the other day. The central bank's balance sheet was a topic of conversation. What he thinks tariffs are doing to inflation. What he wants his legacy to be, seeing as how he's only got three meetings left before running this economy is somebody else's job. Also, immigration and the macroeconomy. He talked about how job gains have slowed significantly since earlier this year and how that's likely connected to the Trump administration's immigration policy. And it turns out, as Marketplace's Elizabeth Troval is about to tell us, not only is immigration a labor market story, it's a monetary policy story, too.
To support stable prices and maximum employment, the Fed must decide whether Labor Department data is hot or cold. But to understand that, You have to understand what's happening with the immigrant population. Michael Strain with the American Enterprise Institute says that's because immigrants made up a huge number of new job seekers under President Biden. But unemployment was steady because massive amounts of new jobs were also created. If we had a month where the economy added 250,000 net new jobs, you know, that looked like a decent month. Those new job seekers from other countries found jobs. But if the number of foreign-born people drops dramatically, as it has under President Trump relative to President Biden, then the number of net new jobs you need for a decent month drops dramatically.
Now, there are far fewer new job seekers out there because of restrictive immigration policies. So the goalposts for what healthy job growth looks like changed. That could make for some pretty interesting labor data ahead, says economist Yelena Shalitova with the conference board. We could be in an awkward situation when we have a few months of negative payrolls growth, but not in a recession. And it could be like close to zero and still be considered as a relatively healthy labor market. Part of why these things can balance out is because immigrants aren't just workers. They're consumers, too, says Wendy Edelberg with the Brookings Institution. They are neither supplying their labor nor spending money in the U.S.,
And so what this means is that the current immigration policy is not just reducing labor supply. It's also reducing how many people employers want to hire. Immigrants who have left the U.S.
What insights did Chair Powell share about immigration and the labor market?
are no longer buying goods and services here, and that eliminates the demand for certain jobs. I'm Elizabeth Troval for Marketplace. Wall Street today, two out of three new record highs. Thanks again, Jay Powell. We'll have the details when we do the numbers. so so One of the things the president talks about when he talks up his tariffs is that they give him leverage over other countries, which, yes, sometimes for sure. With China, though, not so much. So we're going to talk for a little bit about the state of play between the world's two biggest economies. Adam Posen is the president of the Peterson Institute for International Economics. Adam, welcome back to the program. Always good to have you on. Glad to be with you, Todd.
Let's do a level set here. The temperature of the U.S.-China relationship today versus, oh, say, January 21st. A lot closer to normal, a lot cooler. Well, I mean, too cool is bad, too hot is bad. It's a lot more temperate. How come? What has been happening just sort of behind the headlines that are making this all seem the way it is? I think there are a few things going on but they all converge.
How do immigration policies impact job creation in the U.S.?
So one thing which was very important was a month and a half ago or so, the members of the We Hate China Commission which is the US-China Security Commission went to China, met with everybody senior except Xi, made constructive noises that I think are positive about having more military-to-military contact
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:02–3:08
2
What insights did Chair Powell share about immigration and the labor market?
3:08–4:43
3
How do immigration policies impact job creation in the U.S.?
4:43–9:25
4
What role does productivity play in the current economic landscape?
9:25–10:55
5
How is AI transforming the recycling industry?
10:55–12:58
6
What challenges does the recycling sector face today?
12:58–19:36
7
How does the U.S.-China trade relationship affect the economy?
19:36–26:24