Martha Gimbel, Director of the Yale Budget Lab, discussed the long-term economic impacts of current immigration policies, even assuming a return to baseline immigration levels by 2029. She highlighted that the present slowdown in immigration would lead to a reduction in business creation for decades. This is attributed to missing younger immigrant cohorts who would not be in their prime years for founding businesses, and the absence of their potential native-born descendants who would otherwise contribute to new firm creation in the mid-century. The number of new employer-firm entries is projected to remain significantly below baseline even in 2075.
The analysis indicates a substantial decline in new employer-firm entry, peaking in the early 2030s with 9,000 to 16,000 fewer firms annually, representing a 1.7% to 3.0% drop. Even by 2075, the annual deficit is estimated at 4,000-6,500 fewer firms, primarily due to the missing descendants of immigrants. This sustained reduction in business formation is expected to result in lower economy-wide productivity. By 2052, productivity is projected to be lower by 0.25% to 0.44%, with the impact slowly diminishing but still present by 2075.
These policy changes are expected to reduce U.S. productivity growth meaningfully over the next several decades. The cumulative shortfall in the level of aggregate productivity is estimated to be about 0.44% under a low immigration scenario (EVW Low) and 0.25% under a high immigration scenario (EVW High) by 2055. This productivity loss, combined with immediate effects on labor supply and consumer demand, has significant financial implications. Applying the peak productivity shortfall to CBO's 2055 per-capita income projection implies an annual loss of about $600 per person under EVW Low and about $350 per person under EVW High, totaling approximately $225 billion and $125 billion annually across the projected populations for each scenario, respectively.
Separately, the Brookings Institution estimated that net migration was close to zero or negative in 2025 for the first time in at least fifty years, ranging from -295,000 to -10,000, and is likely to remain negative in 2026. This slowdown in immigration has dampened growth in the labor force, consumer spending, and GDP. Reduced consumer spending is estimated to be between $40 billion and $60 billion less in 2025 than in 2024, with a further reduction of $10 billion to $40 billion in 2026. The changes in immigration policy are projected to affect GDP growth in 2025 by between -0.2 and -0.3 percentage points, and in 2026 by -0.1 to -0.3 percentage points. These figures assume no loosening of monetary policy by the Federal Reserve in response to lower potential employment growth.
