This may seem boring to some, but it’s pretty scary as bad things accelerate from 2028 with a potential crisis in the US by 2032.
Some excellent research from the Fed: Labor force growth, breakeven employment, and potential GDP growth
“Labor force growth has been slowing and could be near-zero starting this year, driven by weak population growth reflecting low net immigration and by declining labor force participation reflecting population aging. Such weak growth in the labor force is unprecedented in the United States’ recent history. In this note we highlight two significant implications of near-zero labor force growth: First, near-zero labor force growth implies that breakeven employment growth (i.e. the pace needed to maintain a steady unemployment rate) would also be near-zero—making negative job growth almost as likely as positive job growth in any given month. Second, it implies that any growth in potential GDP will need to come entirely from productivity growth.”
This is something I’ve been warning clients for 2 years. Policies have consequences. Immigration dropping to almost zero means labor supply growth drops to almost zero.
The impact to GDP growth? It all, all of it, must come from productivity.
The equation is simple: GDP=Productivity*labor supply growth.
The good news is that productivity is grew 2.1-2.2% in 2025. The bad news is that US GDP was 2.1% in 2025.
If productivity falters, US will grow less. Perhaps significantly less. This is the risk of our current immigration policy.
These conditions will drive businesses to adopt AI and tech aggressively. It will further drive the current “no hire, no fire” employment conditions. In this case, those new grads looking for jobs will be hit the hardest.
MT to LT, it will create conditions for very weak job growth and possible layoffs w/US GDP remaining solely a product of productivity.
Sadly, government policies have impact well beyond their immediate intended impact and will have serious negative growth consequences just as the demographic and fiscal picture worsens significantly.
https://lnkd.in/gAqGwSW4
