Federal Reserve Chairman Jerome Powell noted that the increase in the U.S. labor force due to an influx of migrants has contributed to a recent rise in unemployment. During a news conference on Wednesday, following the Fed's decision to cut interest rates for the first time since 2020, Powell explained that the combination of a growing labor force and a slowdown in hiring has affected unemployment levels.
“If you’re having millions of people come into the labor force, and you’re creating 100,000 jobs, you’re going to see unemployment go up,” Powell said. He highlighted that the trend in unemployment is influenced by changes in the labor supply.
The current unemployment rate is 4.2%, and the Federal Reserve projects it will increase to 4.4% by the end of the year. Powell did not specify whether the migrants referenced held legal or unlawful immigration status.
The Bureau of Labor Statistics (BLS) has stated that its surveys likely include some undocumented workers but are not designed to identify legal status. A recent analysis by Goldman Sachs suggested that the influx of illegal immigration might not be fully reflected in current job data.
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