It’s a worthwhile question.   And regardless of one’s opinion on how open the immigration door remains in America in 2025, there can be no doubt legal immigration fueled much of the economic success America has achieved.

I believe 2025 will go down in history as a year with many unique American experiences.   It’s been a wild ride so far!   And, again, as this is an economic blog, and as employment is a foundational metric of the American economic strength, today we’re going to look into a unique comment by our FED Chair while at the recent Jackson Hole symposium.   Jerome Powell’s phrase —“a curious kind of balance”— was a standout moment in his August 22, 2025 speech.   Here’s the precise quote:

 

“While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers”.

 

What was Chairman of the Federal Reserve — the most powerful central bank in the world — talking about?   Let’s explore further.

 

Welcome to this week’s Steak House Index update.

 

If you are new to my blog, or you need a refresher on the SHI10, or its objective and methodology, I suggest you open and read the original BLOG: https://www.steakhouseindex.com/move-over-big-mac-index-here-comes-the-steak-house-index/

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Why You Should Care:   The US economy and US dollar are the bedrock of the world’s economy.   But is the US economy expanding or contracting?

 

Expanding.

 

The ‘real’ growth rate — the number most often touted in the mainstream media — was 3% in the last quarter.   In “current dollar” terms, US annual economic output rose to $30.331 trillion.

According to the World Bank, the world’s annual GDP  expanded  to over $111 trillion in 2024.   Further, IMF expects global GDP to reach almost $132 trillion by 2030.   The US?  Various forecasts project about $37 trillion for American GDP in 2030 — I believe it could be even higher.

America’s GDP remains around 28% of all global GDP.  Collectively, the US, the European Common Market, and China generate about 70% of the global economic output.  These are the 3 big, global players.   They bear close scrutiny.

 

The objective of this blog is singular.

 

It attempts to predict the direction of our GDP ahead of official economic releases.  Historically, ‘personal consumption expenditures,’ or PCE, has been the largest component of US GDP growth — typically about 2/3 of all GDP growth.  In fact, the majority of all GDP increases (or declines) usually results from (increases or decreases in) consumer spending.  Consumer spending is clearly a critical financial metric.  In all likelihood, the most important financial metric. The Steak House Index focuses right here … on the “consumer spending” metric.  I intend the SHI10 is to be predictive, anticipating where the economy is going – not where it’s been.

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Taking action:  Keep up with this weekly BLOG update.  Not only will we cover the SHI and SHI10, but we’ll explore “fun” items of economic importance.   Hopefully you find the discussion fun, too.

If the SHI10 index moves appreciably -– either showing massive improvement or significant declines –- indicating growing economic strength or a potential recession, we’ll discuss possible actions at that time.

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The Blog:

 

Lazarus’ words:  “I lift my lamp beside the golden door.”   Wow.  Amazingly visceral.

With those words, the 305-foot-tall Statue of Liberty told the world that America was open for legal immigration.   Wide open.

For nearly a century and a half, the door remained wide open, welcoming millions from around the globe who would take just about any job in America so that some day, far in the future, their children, or their children’s children could build businesses, conduct research, and so on.

From America’s beginning, our founding fathers believed legal immigration wasn’t just sentiment; it was a demographic and economic engine.   John Adams’ himself, later the 2^nd President of the United States, offered a well-known, often-quoted, profound reflection on generational sacrifice and progress.   He understood that each generation lays the groundwork for the cultural, intellectual, and economic future growth of the country.   

In a letter to his wife Abigail dated May 12, 1780, he wrote:

 

“I must study Politics and War that my sons may have liberty to study Mathematics and Philosophy.  My sons ought to study Mathematics and Philosophy, Geography, natural History, Naval Architecture, navigation, Commerce and Agriculture, in order to give their Children a right to study Painting, Poetry, Music, Architecture, Statuary, Tapestry and Porcelain.”

 

Fast forward a few hundred years, the America we live in today is the manifestation of that open door described in Lazarus’ poem, a veritable melting pot of people and cultures from across the globe. 

And as one might expect, everyone everywhere today has an opinion about immigration — not just here in the US.   I suspect there are very few of the 200 or so countries around the world where immigration is not a large, societal issue today. 

But we’re talking about the United States now.  And in the United States, while it’s possible that golden door remains open today, it’s not open very much.   Perhaps there’s just a sliver of a crack. 

But as this is an economic blog, the questions on today’s agenda are these: 

 

Have 2025 immigration policies impacted new job formation here in the US?  

What impact will immigration policies have on future US economic growth?

 

Let’s talk facts:

This year, for the first time in 50 years, the US is experiencing the first decline in its foreign-born population.   By the time this year ends, net migration may be negative for the first time in modern history.

Both legal and “undocumented” immigration have plummeted this year.   Southern border crossings have collapsed.   The US Department of Homeland Security reported that in July “border apprehensions” totaled just 4,498 — an average of just 148 per day.    Compare that to about 2.8 million apprehensions during 2023.   

For more than 2 decades, “legal admissions” (green cards) have been fairly steady at about 1 million per year.  That number peaked at 1.18 million in 2016.   By 2022 the number rebounded back to about 1 million and reached almost 1.2 million in 2023.   And in the first 3 quarters of 2024, a bit over 980,000 were issued.   

But not in 2025. Unfortunately for America, legal admissions are also down sharply in 2025.  Data suggests the numbers are down by about 50%.   Whether this is the Trump administration’s goal, or an unintended consequence, legal immigrants, too, are staying home in 2025. 

As US fertility rates have been stuck well below replacement levels for more than a decade, this could become a major headache for US employers.   We face real economic consequences as a result.  It been long understood that immigrants supplied labor at both ends of the skill spectrum:   “High-skill” entrants to the country have been disproportionately represented by foreigners who studied STEM and Ph.D programs.   This group is also heavy in trendsetting inventiveness, patent applications and startups.   A loss of 500,000 of these folks annually is a serious “brain drain” for America.   

Then we have the “entry-level workers” who for years have concentrated in agriculture, construction, elder care, and hospitality.   Yes, many of those “entry-level” folks were likely in the country illegally.  With the shifting policies, many of those industries may find it difficult to fill open jobs.   

In a recent article, Reuters reported:

 

“If you’re wondering why so many U.S. Federal Reserve officials are remaining hawkish despite slowing growth, consider how the dramatic drop in immigration and the graying of America are impacting the unfolding labor market picture.  Often overlooked by markets focused on the latest news about tariffs, geopolitics and energy markets, curtailing illegal immigration is now starting to move the needle on the U.S. jobs outlook.”

 

The article continued, saying economists at Barclays tracking these trends reckon that ‘potential’ non-farm private payrolls growth could fall to less than 10,000 per month by the end of next year from more than 100,000 today.

We may be already seeing the impact.   I suspect this is precisely what Jerome Powell’s phrase —“a curious kind of balance”— talking about. 

 

“While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers”.

 

Essentially, Powell was describing an unusual labor market dynamic:  The supply of workers is slowing.  Tighter immigration policies and demographic shifts have reduced labor force growth.   At the same time, demand for workers is also slowing: Businesses are hiring less due to economic uncertainty, tariffs, and softening consumer demand. 

Which, ironically, has resulted in a stable unemployment rate: Despite fewer job openings and hires, the unemployment rate remains low (around 4.2%), which masks underlying fragility.

This “curious balance” implies that while headline metrics look stable, the underlying forces are weakening in tandem—creating a precarious equilibrium. Powell warned that:

 

“Downside risks to employment are rising, and if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment”.

 

Interestingly enough, Powell makes this comment with a US unemployment rate consistently hovering in the low 4% range, near a 50-year low, when the longer-run average in unemployment has been between 5-6% for years. 

So why is Powell a little more worried today?

Because both hiring and “job-seeking” have slowed.   Significantly.   And simultaneously. 

Usually, when hiring slows the unemployment rate rises.   Not this time.   And usually when “job-seeking” slows, the “labor force participation rate” falls.  Not this time.  No, today, the labor force participation rate is right at 62.2% — almost identical to its longer-term, pre-pandemic rate. 

So, yes, Powell has reason to be a bit worried.  Because economically speaking, these outcomes are kind of weird.   2025 seems to be the year of weird.  

Consider the graph below:

 

The trendline is definitely worrisome.   Frankly, using this chart, negative territory — MEANING JOB LOSSES — look to be on the card.    But this graphic, unfortunately, doesn’t tell the whole story.   I clipped it from the post of an an economic blogger I follow.   The author began his data set in 2021 — right as the US job market was rebounding from Covid.  

So I modified the data set.   Here is the revised chart covering a full 10-year history of the data set:

 

 

Here we see that the 3-month moving average, while low at the moment, doesn’t scream for a precipitous future decline.  I simply wanted to create some better context here. 

Let’s get back to Powell’s concern.   Remember that the FED has a “dual mandate.”   They are charged with (1) maintaining price stability and (2) maintaining full employment.   Well, at the moment, since the unemployment rate remains at or near a 50-year low, the box for #2 is checked.   Number 1?   Well, they’re working on it.   

But the problem the FED faces here is we’re in uncharted territory.   For now, new entrants into the labor force have slowed.   At the same time demand for new workers, ironically, has also slowed.   So the unemployment rate remained static.   For now.   But for how long?     Hence Powell’s comments …. The “markets” are now expecting a FED rate cut on September 17.    I agree.   

The FED will cut the FFR by 25 basis points on the 17th.   Not because they feel they have won the inflation battle.  But out of an abundance of caution.  Finally, I think they believe it’s time.  

Coming full circle on the “immigrant thing,” I have these closing comments.   American and the American economy was built on immigration — legal immigration.   For many decades, the US and our economy have been the envy of the world, with our proverbial streets paved with gold.  I would like to see it stay that way.  My 2 cents. 

And we have economic incentive to ensure it does stay that way.   Without a robust legal immigration system, there’s a very good chance US population — and economic vitality — may begin to slip.   These are not good outcomes, folks.  I remain hopeful our great leaders will agree and find intelligent and actionable solutions.   🙂

To the steakhouses? 

 

 

Boring!   Sorry folks, but there’s almost nothing new here.    Longer term chart:

 

 

Sorry if I was a bit long winded today.   Thanks for tuning in.

<Terry Liebman>