U.S. Economic Growth Update
Demographic Sudden Stop and The Inflation Paradox
The defining macroeconomic event of 2024 was the immigration surge. The defining event of 2025 was its reversal.
2026 is the year of the demographic sudden stop as it relates to the labor market.
The Post War American labor market experience has been characterized by an expanding labor market.
The first wave of baby boomers entered the labor market in the 1960’s.
Women entered the labor market enmasse in the 1970’s.
African Americans went from the margins of the labor market to the mainstream after the Civil Rights Act.
Various immigrant waves (Southeast Asia, Mexico, then broader Latam, etc.) entered the labor market over the course of decades, ebbing and flowing with the political tides.
New data confirm a historic reversal: net migration turned negative in early 2025 and is projected to remain negative through 2026—the first such contraction in over 50 years.