Open border 'saved' the economy (reprise)
Daily Data: Another research institution revisits its assumptions about migrants and the immaculate recovery
In today’s dispatch:
Barclays joins the “oh, it’s just growth by acquihire” club
migrant surge: unprecedented, deflationary and pro-growth
without migrants, we would have no job growth at all…and it’s not because we’re lazy
Great Replacement is real, and it’s complicated. Best to stop pretending otherwise.
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The open border ‘saved’ the economy (reprise)
Let’s add Barclays to the list of expert institutions who now concede that “actually the open border is a very big deal because, without an unprecedented surge of migrants taking all the new jobs, there would be basically no growth to speak of, and inflation would be worse.”
Is this good? Bad? Well, like most things, it’s complicated. But it always helps to see clearly, in the first instance.
In a report titled “A Mighty Tailwind” (h/t Random Walk friend, Steve Goldstein), Barclays estimates that (a) there are way more migrants than anyone thinks; and (b) they’ve accounted for ~75% of payroll adds, both of which combine to explain how we’ve been able to kick labor-shortage-driven inflation, while still maintaining growth.
To Random Walk readers, this is old news.
Random Walk has long maintained that secular aging, plus a “pull forward” of retirees, precipitated a labor shortage, leading to a wage spike, leading to inflation . . . and that our immaculate landing is largely a story of a few million migrants replacing those retirees.
No great “resilience” or “boom,” just a game of catch up for a still-aging nation (with some still simmering tradeoffs), that has now brought us to the precipice of “ok, so now that we’re all caught up, what happens next?” Can we do better than “growth by acquihire” and, if not, what then?
Anyways, I won’t rehash it all here, but I will deliver Barclays’ juiciest bits to add even more evidence for the unconvinced.
There are really three charts worth bringing to the fore.
I see your 3.3M, and raise you 4M
First, the surge of migrants is both massive and unprecedented:
Barclays estimates ~4M migrants last year alone, which is 700K more than the CBO’s 3.3M estimate (which was higher than anyone else’s).1
In other words, the population of Oregon joined the country last year alone.
An historically high share of foreign-born workers gets historically higher
Second, this is not immigration as usual, but reflects a fairly drastic change to the composition of the labor force, and of course, the country.
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