The best measure America has of undocumented, or illegal, migration is apprehensions at the southern border. These numbers are tricky to handle. They tend to go up when the economy is hot (it is generally under-appreciated that illegal migration surged in 2019 when Mr Trump was president). Covid-19 allowed the federal government to quickly expel migrants who crossed the south-western border under a public-health measure called Title 42, which stayed in place until long after the worst of the pandemic was over. But those who were deposited on the Mexican side of the border often attempted to cross again. This partly explains the spike in encounters. Democrats who do not live in border states tend not to realise that the “border chaos” that Republicans talk about is real. That was until Republican politicians in those border states began shipping migrants to big Democratic cities such as New York and Chicago.
- Date Posted:
- January 23, 2024
Our model forecasts no statistically significant additional pressures from wages on prices if year-over-year ECI growth in the fourth quarter lands within the dashed vertical lines, that is, 3.78 to 4.25%. Even for values slightly above this range but in line with recent realizations, our model predicts only a moderate effect of ECI growth on one-year-ahead inflation. Note that our results imply there will be no additional impact on inflation dynamics from the labor market for a range of year-over-year ECI growth for 2023:Q4 that is clearly higher than the sum of the Federal Reserve’s inflation target of 2% and historic average productivity growth. The key economic force behind this result is the catch-up effect referred to above. Because inflation has, on average, grown faster than productivity-adjusted wages in the last three years, there is room for wage growth to surpass inflation for some time so that it aligns with the historic relationships among the growth rates of prices, wages, and productivity.