ABA Banking Journal
No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
SUBSCRIBE
ABA Banking Journal
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive
No Result
View All Result
No Result
View All Result
Home Economy

New immigration data sheds light on areas of the economy that continue to perplex economists

Explaining the surprising strength of consumer spending, the engine of economic growth.

July 30, 2024
Reading Time: 2 mins read
Maximizing the impact of data analytics for bank marketers

By Tyler Mondres

Recent immigration estimates from the Congressional Budget Office help answer questions that have left many economists scratching their heads. What is supporting surprisingly robust employment growth? How much must the labor market slow to curb inflation? And how are households sustaining such strong consumer spending?

A report from the Hamilton Project argues upwardly revised immigration data for 2023 helps explain some of these trends. In January, the CBO estimated that net immigration for 2023 was 3.3 million, up significantly from its pre-pandemic projection of 1 million.

Before the pandemic, forecasters projected that the economy could sustainably accommodate employment growth of 60,000 to 130,000 per month in 2023 without stoking inflation. Last year, nonfarm payrolls increased by an average of 251,000 a month — two to four times higher than the sustainable pace. As a result, many concluded that the labor market was expanding at a rate inconsistent with price stability.

After incorporating recent immigration estimates, though, Wendy Edelberg and Tara Watson argue that the economy in 2023 could have sustainably accommodated higher employment growth without inducing inflation, anywhere from 160,000 to 230,000 per month. This pace is expected to slow to 160,000 to 200,000 a month in 2024, well above the pre-pandemic forecast of 60,000 to 100,000.

While these new estimates narrow the gap between monthly job gains and the “sustainable pace,” they suggest that tightness in the labor market is still contributing to inflationary pressures. In the first quarter of 2024, the economy added 276,000 jobs per month. To meet the sustainable pace calculated by the authors, monthly gains would need to drop to 121,000 to 175,000 for the remainder of the year.

The new immigration numbers also help explain the surprising strength of consumer spending, the engine of economic growth. The authors estimate that “immigration accounted for roughly $48 billion in personal income … in 2023 and will account for roughly $76 billion in 2024.” Real consumer spending, which was 1.2 percent in 2022 and 2.7 percent in 2023, was boosted by an estimated 10 and 20 basis points, respectively. Through spending, immigrants are estimated to have boosted economic growth 0.1 pp in both 2022 and 2023. Real GDP grew 0.7 percent in 2022 and 3.1 percent in 2023.

The contribution to real consumer spending and economic growth is modest but adds another piece to the puzzle explaining recent economic trends. The authors argue that immigration has likely produced little additional pressure on aggregate prices or wages because it has resulted in both greater production and greater consumer demand. However, they provide four examples of how immigration may have had sector-specific inflationary effects.

Higher immigration flows likely induce firms to purchase additional equipment for their employees. For example, additional office chairs, phones and computers for office workers. Government spending on public amenities also likely increases in communities that see net immigration. More students, for instance, would require states to hire more teachers. There is also likely a mismatch between the goods and services that immigrants produce and the ones they consume — which in the short term would be disinflationary for some sectors and inflationary for others. Finally, higher immigration should result in higher rental housing demand, placing pressure on rents.

Edelberg and Watson’s analysis of new immigration data helps shed some light on areas of the economy that have continued to perplex economists. It helps partially explain the surprising resilience of both the labor market and consumer spending over the past two years. It also suggests that the economy can support a faster pace of employment than previously believed without affecting the Federal Reserve’s goal of bringing down inflation.

Tags: DataEconomy
ShareTweetPin

Author

Tyler Mondres

Tyler Mondres

Tyler Mondres is senior director of economic research at ABA and a frequent contributor on economic and fintech topics to the ABA Banking Journal.

Related Posts

Hitting home

Hitting home

ABA Banking Journal
September 9, 2026

When people talk about financial services, they often talk about systems, markets, platforms and performance. But on Sept. 11, all of that fell away.

New York Fed: Consumer inflation expectations mostly hold steady

New York Fed: Inflation expectations ticked down in August

Economy
September 8, 2026

Consumer inflation expectations in August decreased slightly at the medium-term horizon and remained unchanged at the short- and longer-term horizons, according to the Federal Reserve Bank of New York’s most recent Survey of Consumer Expectations.

Consumer credit increased in March

Consumer credit increased a seasonally adjusted annual rate of 4.2% in July

Economy
September 8, 2026

Consumer credit increased at a seasonally adjusted annual rate of 4.2% in July. Total outstanding credit increased to $5,186.2 trillion during the month, from June’s revised total of $5,168.2 trillion.

Study: CDFI microloans lead to better business outcomes for borrowers

ABA DataBank: Small-business optimism cools in August, remains above average

Economy
September 8, 2026

ABA economists believe that small-business owners remain cautiously optimistic amid a mixed operating environment and that conditions could lead to tepid loan demand for small businesses in the coming months.

Old ways of life, new bank opportunities

Old ways of life, new bank opportunities

Community Banking
September 8, 2026

As the Amish and Plain population explodes across the country, their growth creates new opportunities for community banks with flexible policies.

ABA DataBank: Job market heats up for the summer

ABA DataBank: August job growth comes in above expectations

Economy
September 4, 2026

ABA economists view this month’s strong payroll report as a positive catalyst for business and consumer loan demand. The continued low unemployment rate should also keep consumer credit performance strong.

NEWSBYTES

Hill: FDIC on track to issue stablecoin rulemaking by year’s end

September 9, 2026

Government report finds cannabis banking in limbo amid regulatory uncertainty

September 9, 2026

ABA urges accounting standards body to appropriately scale objectives, inspections

September 9, 2026

SPONSORED CONTENT

Banking Technology at a Strategic Crossroads

Banking Technology at a Strategic Crossroads

September 8, 2026
Taming AI Agent Sprawl: A Playbook for Consumer Lending

Taming AI Agent Sprawl: A Playbook for Consumer Lending

September 1, 2026
Grow Public Deposits Without the Operational Burden End Fragment

Grow Public Deposits Without the Operational Burden End Fragment

September 1, 2026
Could Your Bank Absorb the Hidden Cost of Running Legacy Systems?

Could Your Bank Absorb the Hidden Cost of Running Legacy Systems?

August 20, 2026

PODCASTS

Podcast: Banking the brave new world of college athletics

August 4, 2026

Podcast: Tactics for meaningful strategic planning

July 28, 2026

Podcast: Why it might be time to revisit a key FDIC ratio

July 23, 2026

American Bankers Association
1333 New Hampshire Ave NW
Washington, DC 20036
1-800-BANKERS (800-226-5377)
www.aba.com
About ABA
Privacy Policy
Contact ABA

ABA Banking Journal
About ABA Banking Journal
Media Kit
Advertising
Subscribe

© 2026 American Bankers Association. All rights reserved.

No Result
View All Result
  • Topics
    • Ag Banking
    • Commercial Lending
    • Community Banking
    • Compliance and Risk
    • Cybersecurity
    • Economy
    • Human Resources
    • Insurance
    • Legal
    • Mortgage
    • Mutual Funds
    • Payments
    • Policy
    • Retail and Marketing
    • Tax and Accounting
    • Technology
    • Wealth Management
  • Newsbytes
  • Podcasts
  • Magazine
    • Subscribe
    • Advertise
    • Magazine Archive
    • Newsletter Archive
    • Podcast Archive
    • Sponsored Content Archive

© 2026 American Bankers Association. All rights reserved.