Fed Chair Powell: Migrant border crisis causing rising unemployment

Federal Reserve Chairman Jerome Powell pointed to the "influx" of migrants coming across the U.S. border as a cause for growing unemployment.

“If you’re having millions of people come into the labor force, then — and you’re creating 100,000 jobs — you’re going to see unemployment go up,” Powell said on Wednesday during a news conference after the Fed decided to cut interest rates for first time since 2020.

"So it really depends on what’s the trend underlying the volatility of people coming into the country," he added.

The slowing hiring rate is also a factor behind the growing unemployment, Powell said.

“We understand there’s been quite an influx across the borders, and that has actually been one of the things that’s allowed the unemployment rate to rise,” he said. “And the other thing is just the slower hiring rate, which is something we also watch carefully. So it does depend on what’s happening on the supply side.”

The unemployment rate is currently 4.2% and the Fed predicted that it will rise to 4.4% in the last quarter of the year.

Powell did not distinguish between migrants with unlawful immigration status or legal status in his comments.

According to the Bureau of Labor Statistics webpage about employment and unemployment estimates, "it is likely that both surveys include at least some undocumented immigrants." 

The BLS noted that "neither the establishment nor the household survey is designed to identify the legal status of workers" so it is "not possible to determine how many are counted in either survey." 

The BLS has explained that the "establishment survey does not collect data on the legal status of workers" while the "household survey does include questions which identify the foreign and native born, but it does not include questions about the legal status of the foreign born."

An analyst note from Goldman Sachs that was published in April argued that the U.S. government is not accurately capturing the influx of illegal immigration in jobs data.