Goldman Sachs analysts warn that sweeping immigration restrictions under President Donald Trump’s second term have triggered a dramatic contraction in the flow of foreign-born workers, precipitating roughly an 80% decline from historical net-immigration levels. The bank’s U.S. economics team released the analysis on Feb. 16, highlighting a fall from an average of about 1 million net arrivals per year in the 2010s to 500,000 in 2025 and an expected 200,000 in 2026. That drop, Goldman links to a mix of elevated deportations, a pause on immigrant visa processing covering 75 countries and expanded travel bans. The report says the shift is already changing the baseline for how many monthly jobs the economy needs to avoid rising unemployment.
Key Takeaways
- Goldman Sachs’ report (Feb. 16) estimates a roughly 80% decline in net immigration from the 2010s baseline, with net arrivals projected at 200,000 in 2026.
- Net immigration averaged ~1,000,000 per year in the 2010s, fell to ~500,000 in 2025 and is projected at ~200,000 in 2026, per Goldman’s U.S. economics team.
- The firm attributes the decline to higher deportations, a pause on visa processing for 75 countries, expanded travel bans and lost Temporary Protected Status for some nationals.
- Goldman estimates the monthly “break-even” job-creation rate to keep unemployment stable will drop from ~70,000 today to ~50,000 by end-2026.
- Official unemployment is around 4.3% (recent low 4.28%), and Goldman projects a modest rise to 4.5% if risks do not worsen.
- The report warns the crackdown could push employment into informal channels, complicating federal data and obscuring true labor-market slack.
- Goldman assigns a 20% probability of a moderate recession in the next 12 months, citing weak labor-demand starting points and faster AI deployment risks.
Background
Immigration has been a consistent contributor to U.S. labor-force growth for decades, supplying large shares of workers in construction, hospitality, agriculture and select professional fields. During the 2010s the United States saw net immigration near 1 million annually, a pace that helped offset demographic aging among native-born workers and supported steady labor-force expansion. Policy shifts in the early-to-mid 2020s reduced legal inflows and intensified removals, altering that dynamic.
In early 2026, the federal government announced a suite of measures including heightened enforcement, expanded travel restrictions and a temporary pause on immigrant visa processing affecting 75 countries. Parallel moves to curtail green card and certain visa flows, and changes to Temporary Protected Status for some nationalities, have added further downward pressure. Economists say those policy changes interact with long-term forces—an aging native population and slower labor-force participation—to reshape supply-side trends.
Main Event
On Feb. 16 Goldman Sachs’ U.S. economics group, led by David Mericle, published an analysis mapping recent policy measures to a sharp drop in projected net immigration. The firm quantified the change: after averaging roughly 1 million net arrivals yearly in the 2010s, the number fell to about 500,000 in 2025 and is forecast at roughly 200,000 for 2026. Goldman directly links those projected falls to intensified deportations, visa-processing pauses and travel bans announced during the administration’s second term.
The report argues that a smaller inflow of foreign-born workers reduces the number of new hires needed each month to keep unemployment flat. Goldman estimates the economy’s monthly break-even hiring rate—previously around 70,000 jobs—will fall to about 50,000 by late 2026. That recalibration means labor market readings that would once have suggested weakness may now look consistent with stability.
Goldman’s economists also flag a potential increase in off-the-books employment as enforcement tightens. They warn that stricter immigration controls could push some immigrant labor into informal jobs that escape official payroll surveys, creating measurement challenges for policymakers, including the Federal Reserve. The firm notes concurrent trends: a notable slowdown in job openings (now roughly 7 million) and a drop in tech payrolls, even as tech’s share of total employment remains modest.
Analysis & Implications
First, the immediate effect is statistical: fewer entrants means the labor force grows more slowly, lowering the absolute number of new jobs needed each month to prevent the unemployment rate from rising. That dynamic will likely mute some traditional signals in monthly payrolls—what previously read as weak hiring may be consistent with a stable unemployment rate under the new inflow assumptions.
Second, slower immigration can produce tighter labor markets in specific industries that historically relied on immigrant hires, pushing wages up in those pockets and encouraging substitution—automation or domestic reallocation—elsewhere. Goldman cautions that faster, disruptive AI deployments could amplify dislocation, particularly if firms respond to smaller labor supply by investing in labor-saving technologies.
Third, the informalization of some work poses risks for economic measurement and policy. If a meaningful share of immigrant activity migrates outside official data, policymakers could underestimate slack or overheating in particular segments, complicating monetary and fiscal calibration. Goldman explicitly flags this as a threat to clear readings on labor demand.
Comparison & Data
| Period | Net Immigration (annual) |
|---|---|
| 2010s (average) | ~1,000,000 |
| 2025 (actual) | ~500,000 |
| 2026 (Goldman projection) | ~200,000 |
| Change vs. 2010s baseline | ~80% decline |
The table summarizes the core numeric claims at the center of Goldman’s analysis. By this accounting, the net inflow of foreign-born workers has shifted from a structural contributor to labor-force growth to a much smaller margin, forcing forecasters to revise the monthly job-creation threshold that preserves stable unemployment. The bank’s concurrent metrics—headline unemployment around 4.3% and job openings near 7 million—frame the wider labor-market picture.
Reactions & Quotes
“What we are observing is a pronounced drop in the inflow of new workers, which alters the labor-supply backdrop for hiring and wage dynamics.”
David Mericle, Goldman Sachs U.S. Economics team (paraphrased)
“We assess a moderate, roughly 20% chance of a recession over the next year, given downside risks to labor demand.”
Jan Hatzius, Goldman Sachs chief economist (paraphrased)
“Tighter enforcement can push activity into informal channels, making official statistics less representative of true labor use.”
Goldman Sachs report summary (paraphrased)
Explainer / Glossary
Unconfirmed
- Significant scale of informal employment: the precise share of displaced workers moving to the shadow economy is not yet quantified and remains uncertain.
- Long-run automation response: the timing and scale at which firms substitute labor with AI or machinery in response to tighter immigration is debated and not yet settled.
- Full effects of the 75-country visa pause: implementation details and legal challenges could alter the pause’s ultimate impact on net immigration.
Bottom Line
Goldman Sachs’ analysis frames recent U.S. immigration enforcement and visa-policy changes as a material shock to the supply of foreign-born labor, with projected net inflows falling roughly 80% from a 2010s baseline. The immediate technical consequence is a lower monthly job-creation threshold (from about 70,000 to roughly 50,000) needed to stabilize unemployment—meaning some weak-looking payroll readings could be consistent with labor-market balance under the new dynamics.
Beyond statistics, the shift raises distributional and policy questions: which industries will feel persistent tightness, how wage and price pressures evolve in affected sectors, whether off-the-books work grows, and how quickly firms accelerate automation. Policymakers and markets will have to weigh these supply-side changes alongside demand trends and technological disruption when assessing recession risk and setting monetary policy.
Sources
- Fortune (news report, Feb. 17, 2026) — news coverage summarizing Goldman Sachs’ analysis.
- Goldman Sachs (official analysis repository, U.S. Economics team) — source for the bank’s research notes and related reports.