The Blubber

For 2023 and 2024, immigrants are estimated to add 3.3 million people to the US population per year, a cited Congressional Budget Office report shows. That's over three times the average seen in the last decade. 

But JPMorgan estimates that this growth could actually have reached higher over the past two years, coming close to four million.

At such levels, a number of macroeconomic puzzles are easier to resolve, Chief Economist Michael Feroli wrote.

For instance, labor growth has consistently defied market expectations that it should eventually give in, as both January and February job numbers came in well above forecasts.

If population growth is as high as the CBO indicates, that would require employment growth to be nearer to 200,000 per month just to meet new workforce entrants. That's opposed to the 100,000 estimate implied by figures from the US Census.

The surge of immigrant workers is boosting US output growth, something that should keep accelerating as long as the migrant surge continues — even in the case that output per worker is lower among foreign-born labor, JPMorgan said.

The observation is shared by Morgan Stanley and Goldman Sachs, which lifted its 2024 GDP forecast due to the labor jump. In estimates published this week by Goldman, potential GDP growth should be around 2.1% for the year.

But while immigration is proving a boon for US output, it's weighing on the housing market, JPMorgan noted. 

"Even if the average household size for immigrants is greater than that for natives, it's hard to see how the added demand for housing units is much less than 500,000 per year," the note said. "This may help explain why even with housing completions recently running just below 1.5 million saar, homeowner and rental vacancy rates have barely budged off their multidecade lows."