Moody's Analytics chief economist Mark Zandi has been looking closer at the May jobs report, which was released last week. The more he examines it, however, the more his concern grows.
In an X thread Monday, Zandi confessed, "The more I cogitate on the May jobs report, released last Friday by the BLS, the more uncomfortable I get about the economy’s prospects. There are a bunch of reasons why."
He thinks that job growth has actually screeched to a halt, and the reason might come from the impact of Trump's mass deportations.
"Given the new population controls, measuring labor force growth is tricky, but by my calculation, it’s at a standstill. Look to the severe restrictions on immigration," Zandi wrote. "This time last year, the foreign-born labor force was growing 5%. It’s now declining. The native-born labor force remains moribund."
He went on to caution that large industries will suffer as a result of the deportations. When Trump was campaigning in 2024, he said that he wanted to deport only criminals. Instead, it's been a broader targeting of all immigrants. Federal agents have shown up at schools to target children.
Even the Latinos for Trump co-founder has spoken out against the way the policy has widened.
"The implications of a flagging labor force are disconcerting," said Zandi. "It means serious disruptions to businesses that rely on immigrant labor, ranging from construction and agriculture to hospitality and retailing. It also means higher inflation, just when the higher tariffs are set to push up prices."
"It also means the economy’s real potential GDP growth – that pace of growth consistent with stable inflation – is much lower," he added. "It is currently closer to 1% than the 2% we have come to think of as typical. Think of what this means for everything from asset returns to our already dire fiscal outlook."