economist

Maria worked cleaning schools in Florida for $13 an hour. Every two weeks, she’d get a $900 paycheck from her employer, a contractor. Not much — but enough to cover rent in the house that she and her 11-year-old son share with five families, plus electricity, a cellphone and groceries.

In August, it all ended.

When she showed up at the job one morning, her boss told her that she couldn’t work there anymore. The Trump administration had terminated the Biden administration’s humanitarian parole program, which provided legal work permits for Cubans, Haitians, Venezuelans and Nicaraguans like Maria.

“I feel desperate,’’ said Maria, 48, who requested anonymity to talk about her ordeal because she fears being detained and deported. “I don’t have any money to buy anything. I have $5 in my account. I’m left with nothing.’’

President Trump’s sweeping crackdown on immigration is throwing foreigners like Maria out of work and shaking the American economy and job market. And it’s happening at a time when hiring is already deteriorating amid uncertainty over Trump’s tariffs and other trade policies.

Immigrants do jobs — cleaning houses, picking tomatoes, painting fences — that most native-born Americans won’t, and for less money. But they also bring the technical skills and entrepreneurial energy that have helped make the United States the world’s economic superpower.

Trump is attacking immigration at both ends of the spectrum, deporting low-wage laborers and discouraging skilled foreigners from bringing their talents to the United States.

And he is targeting an influx of foreign workers that eased labor shortages and upward pressure on wages and prices at a time when most economists thought that taming inflation would require sky-high interest rates and a recession — a fate the United States escaped in 2023 and 2024.

“Immigrants are good for the economy,’’ said Lee Branstetter, an economist at Carnegie-Mellon University. “Because we had a lot of immigration over the past five years, an inflationary surge was not as bad as many people expected.”

More workers filling more jobs and spending more money has also helped drive economic growth and create still more job openings. Economists worry that Trump’s deportations and limits on even legal immigration will do the reverse.

In a July report, researchers Wendy Edelberg and Tara Watson of the centrist Brookings Institution and Stan Veuger of the right-leaning American Enterprise Institute calculated that the loss of foreign workers will mean that monthly U.S. job growth “could be near zero or negative in the next few years.’’

Hiring has already slowed significantly, averaging a meager 29,000 a month from June through August. (The September jobs report has been delayed by the ongoing shutdown of the federal government.) During the post-pandemic hiring boom of 2021-23, by contrast, employers added a stunning 400,000 jobs a month.

The nonpartisan Congressional Budget Office, citing fallout from Trump’s immigration and trade policies, downgraded its forecast for U.S. economic growth this year to 1.4% from the 1.9% it had previously expected and from 2.5% in 2024.

‘We need these people’

Goodwin Living, an Alexandria, Va., nonprofit that provides senior housing, healthcare and hospice services, had to lay off four employees from Haiti after the Trump administration terminated their work permits. The Haitians had been allowed to work under a humanitarian parole program and had earned promotions at Goodwin.

“That was a very, very difficult day for us,” Chief Executive Rob Liebreich said. “It was really unfortunate to have to say goodbye to them, and we’re still struggling to fill those roles.’’

Liebreich is worried that 60 additional immigrant workers could lose their temporary legal right to live and work in the United States. “We need all those hands,’’ he said. “We need all these people.”

Goodwin Living has 1,500 employees, 60% of them from foreign countries. It has struggled to find enough nurses, therapists and maintenance staff. Trump’s immigration crackdown, Liebreich said, is “making it harder.’’

The ICE crackdown

Trump’s immigration ambitions, intended to turn back what he calls an “invasion’’ at America’s southern border and secure jobs for U.S.-born workers, were once viewed with skepticism because of the money and economic disruption required to reach his goal of deporting 1 million people a year. But legislation that Trump signed into law July 4 — and which Republicans named the One Big Beautiful Bill Act — suddenly made his plans plausible.

The law pours $150 billion into immigration enforcement, setting aside $46.5 billion to hire 10,000 Immigration and Customs Enforcement agents and $45 billion to increase the capacity of immigrant detention centers.

And his empowered ICE agents have shown a willingness to move fast and break things — even when their aggression conflicts with other administration goals.

Last month, immigration authorities raided a Hyundai battery plant in Georgia, detained 300 South Korean workers and showed video of some of them shackled in chains. They’d been working to get the plant up and running, bringing expertise in battery technology and Hyundai procedures that local American workers didn’t have.

The incident enraged the South Koreans and ran counter to Trump’s push to lure foreign manufacturers to invest in America. South Korean President Lee Jae Myung warned that the country’s other companies might be reluctant about betting on America if their workers couldn’t get visas promptly and risked getting detained.

Sending Medicaid recipients to the fields

America’s farmers are among the president’s most dependable supporters.

But John Boyd Jr., who farms 1,300 acres of soybeans, wheat and corn in southern Virginia, said that the immigration raids — and the threat of them — are hurting farmers already contending with low crop prices, high costs and fallout from Trump’s trade war with China, which has stopped buying U.S. soybeans and sorghum.

“You’ve got ICE out here, herding these people up,’’ said Boyd, founder of the National Black Farmers Assn. “[Trump] says they’re murderers and thieves and drug dealers, all this stuff. But these are people who are in this country doing hard work that many Americans don’t want to do.’’

Boyd scoffed at Agriculture Secretary Brooke Rollins’ suggestion in July that U.S.-born Medicaid recipients could head to the fields to meet work requirements imposed as part of the One Big Beautiful Bill Act. “People in the city aren’t coming back to the farm to do this kind of work,’’ he said. “It takes a certain type of person to bend over in 100-degree heat.’’

The Trump administration admits that the immigration crackdown is causing labor shortages on the farm that could translate into higher prices at the supermarket.

“The near total cessation of the inflow of illegal aliens combined with the lack of an available legal workforce results in significant disruptions to production costs and [threatens] the stability of domestic food production and prices for U.S. consumers,’’ the Labor Department said in an Oct. 2 filing to the Federal Register.

‘You’re not welcome here’

Jed Kolko of the Peterson Institute for International Economics said that job growth is slowing in businesses that rely on immigrants. Construction companies, for instance, have shed 10,000 jobs since May.

“Those are the short-term effects,’’ said Kolko, a Commerce Department official in the Biden administration. “The longer-term effects are more serious because immigrants traditionally have contributed more than their share of patents, innovation, productivity.’’

Especially worrisome to many economists was Trump’s sudden announcement last month that he was raising the fee on H-1B visas, meant to lure hard-to-find skilled foreign workers to the United States, from as little as $215 to $100,000.

“A $100,000 visa fee is not just a bureaucratic cost — it’s a signal,” said Dany Bahar, senior fellow at the Center for Global Development. “It tells global talent: You are not welcome here.”

Some are already packing up.

In Washington, D.C., one H-1B visa holder, a Harvard graduate from India who works for a nonprofit helping Africa’s poor, said Trump’s signal to employers is clear: Think twice about hiring H-1B visa holders.

The man, who requested anonymity, is already preparing paperwork to move to the United Kingdom.

“The damage is already done, unfortunately,’’ he said.

Associated Press writers Wiseman and Salomon reported from Washington and Miami, respectively. AP writers Fu Ting and Christopher Rugaber in Washington contributed to this report.

WASHINGTON — President Trump’s attempt to fire a member of the Federal Reserve’s governing board has raised alarms among economists and legal experts who see it as the biggest threat to the central bank’s independence in decades.

The consequences could affect most Americans’ everyday lives: Economists worry that if Trump gets what he wants — a loyal Fed that sharply cuts short-term interest rates — the result would likely be higher inflation and, over time, higher borrowing costs for things like mortgages, car loans and business loans.

Trump on Monday sought to fire Lisa Cook, the first Black woman appointed to the Fed’s seven-member Board of Governors. It was the first time in the Fed’s 112-year history that a president has tried to fire a governor.

Fed independence ‘hangs by a thread’

Trump and members of his administration have made no secret about their desire to exert more control over the Fed. Trump has repeatedly demanded that the central bank cut its key rate to as low as 1.3%, from its current level of 4.3%.

Before trying to fire Cook, Trump repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting the short-term interest rate and threatened to fire him as well.

“We’ll have a majority very shortly, so that’ll be good,” Trump said Tuesday, a reference to the fact that if he is able to replace Cook, his appointees will control the Fed’s board by a 4-3 vote.

“The particular case of Governor Cook is not as important as what this latest move shows about the escalation in the assaults on the Fed,” said Jon Faust, an economist at Johns Hopkins and former advisor to Powell. “In my view, Fed independence really now hangs by a thread.”

Some economists do think the Fed should cut more quickly, though virtually none agrees with Trump that it should do so by 3 percentage points. Powell has signaled the Fed is likely to cut by a quarter point in September.

Why economists prefer independent central banks

The Fed wields extensive power over the U.S. economy. By cutting the short-term interest rate it controls — which it typically does when the economy falters — the Fed can make borrowing cheaper and encourage more spending, growth and hiring. When it raises the rate to combat the higher prices that come with inflation, it can weaken the economy and cause job losses.

Most economists have long preferred independent central banks because they can take unpopular steps that elected officials are more likely to avoid. Economic research has shown that nations with independent central banks typically have lower inflation over time.

Elected officials like Trump, however, have much greater incentives to push for lower interest rates, which make it easier for Americans to buy homes and cars and would boost the economy in the short run.

A political Fed could boost inflation

Douglas Elmendorf, an economist at Harvard and former director of the nonpartisan Congressional Budget Office, said that Trump’s demand for the Fed to cut its key rate by 3 percentage points would overstimulate the economy, lifting consumer demand above what the economy can produce and boosting inflation — similar to what happened during the COVID-19 pandemic emergency.

“If the Federal Reserve falls under control of the president, then we’ll end up with higher inflation in this country probably for years to come,” Elmendorf said.

And while the Fed controls a short-term rate, financial markets determine longer-term borrowing costs for mortgages and other loans. And if investors worry that inflation will stay high, they will demand higher yields on government bonds, pushing up borrowing costs across the economy.

In Turkey, for example, President Recep Tayyip Erdogan forced the central bank to keep interest rates low in the early 2020s, even as inflation spiked to 85%. In 2023, Erdogan allowed the central bank more independence, which has helped bring down inflation, but short-term interest rates rose to 50% to fight inflation, and are still 46%.

Other U.S. presidents have badgered the Fed. President Johnson harassed then-Fed Chair William McChesney Martin in the mid-1960s to keep rates low as Johnson ramped up government spending on the Vietnam War and antipoverty programs. And President Nixon pressured then-Chair Arthur Burns to avoid rate hikes in the run-up to the 1972 election. Both episodes are widely blamed for leading to the stubbornly high inflation of the 1960s and ‘70s.

Trump has also argued that the Fed should lower its rate to make it easier for the federal government to finance its tremendous $37-trillion debt load. Yet that threatens to distract the Fed from its congressional mandates of keeping inflation and unemployment low.

Independence vs. accountability

Presidents do have some influence over the Fed through their ability to appoint members of the board, subject to Senate approval. But the Fed was created to be insulated from short-term political pressures. Fed governors are appointed to staggered, 14-year terms to ensure that no single president can appoint too many.

Jane Manners, a law professor at Fordham University, said there is a reason that Congress decided to create independent agencies like the Fed: Lawmakers preferred “decisions that are made from a kind of objective, neutral vantage point grounded in expertise rather than decisions are that are wholly subject to political pressure.”

Yet some Trump administration officials say they want more democratic accountability at the Fed.

In an interview with USA Today, Vice President JD Vance said, “What people who are saying the president has no authority here are effectively saying is that seven economists and lawyers should be able to make an incredibly critical decision for the American people with no democratic input.”

Stephen Miran, a top White House economic advisor, wrote a paper last year advocating for a restructuring of the Fed, including making it much easier for a president to fire governors.

The “overall goal of this design is delivering the economic benefits” of an independent central bank, Miran wrote, “while maintaining a level of accountability that a democratic society must demand.” Trump has nominated Miran to the Fed’s board to replace Adriana Kugler, who stepped down unexpectedly Aug. 1.

There could be more turmoil ahead

Trump said he wants to oust Cook from the Board of Governors because of allegations raised by one of his advisors that she has committed mortgage fraud.

Cook has argued in a lawsuit seeking to block her firing that the claims are a pretext for Trump’s desire to assert more control over the Fed. A court may decide this week whether to temporarily block Cook’s firing while the case makes its way through the legal process.

Cook is accused of claiming two homes as primary residences in July 2021, before she joined the board, which could have led to a lower mortgage rate than if one had been classified as a second home or an investment property. She has suggested in her lawsuit that it may have been a clerical error but hasn’t directly responded to the accusations.

Trump also has personally insulted Powell for months, but his administration now appears much more focused on the Fed’s broader structure.

The Fed makes its interest rate decisions through a committee that consists of the seven governors, including Powell, as well as the 12 presidents of regional Fed banks in cities such as New York, Kansas City and Atlanta. Five of those presidents vote on rates at each meeting. The New York Fed president has a permanent vote, while four others vote on a rotating basis.

While the reserve banks’ boards choose their presidents, the Fed board in Washington can vote to reject them. All 12 presidents will need to be reappointed and approved by the board in February, which could become more contentious if the board votes down one or more of the 12 presidents.

Reappointing the reserve bank presidents and upending that structure would be “the nuclear scenario,” said Adam Posen, president of the Peterson Institute for International Economics.

That, he said, “would be the signal that things are truly going off the rails.”

Rugaber writes for the Associated Press.

It’s probably safe to say that almost no one following the news believes that Donald Trump has a solid, defensible reason to fire Federal Reserve Board Governor Lisa Cook, as he purported to do Monday, notwithstanding his assertion that she is guilty of “potentially criminal conduct.”

It’s not only that the charge she falsified information on mortgage applications is unproven, or that even on their face the accusations are thinner than onion-skin paper.

It’s that Trump has telegraphed his true objective loud and clear virtually from the inception of his current term: to destroy the Fed’s independence so he can force it to act in accordance with what he sees as his immediate political advantage, chiefly by cutting interest rates at a time when that would be economically irrational.

He has pursued this objective in several ways. He has consistently denigrated the work of Fed Chairman Jerome Powell, questioning why Powell was ever appointed (and forgetting that he was the president who appointed Powell).

He has carried on about the cost of a renovation of the Fed’s Washington headquarters building, even misrepresenting the cost and nature of the project, suggesting that it points to Powell’s managerial ineptitude.

And now he’s trying to fire Cook, one of Powell’s supporters on the Fed board. Whether he can do so in the face of Cook’s refusal to go is unclear, and likely to be judged on by the Supreme Court.

That leads us to the principle of Federal Reserve independence and its critical importance for the health of the U.S. economy.

The Fed isn’t the only central bank that cherishes its independence. Most central banks in developed countries do too, although they solidified their status at different times — the Bank of England gaining operational independence over monetary policy in Britain only in 1997.

To be fair, the character of central bank independence has always been murky. “Central banks do not and should not operate in a vacuum,” Tobias Adrian and Ashraf Khan of the International Monetary Fund observed in 2019, acknowledging that “as public institutions, central banks should be held properly accountable to lawmakers and to society.”

Indeed, to paraphrase Finley Peter Dunne’s Mr. Dooley, throughout its own history the Fed, like the Supreme Court, has “followed the election returns.”

That is, it’s rare for the central bank to range too far from what the public expects from government economic management. In any event, the Fed is a creation of Congress, which could theoretically expand or narrow its monetary policy authority and structure its board to make it more responsive to partisan politics.

The consensus among economists is that doing so would be unwise. Political leaders who have made their central banks subservient to their own policies have almost invariably learned the consequences the hard way, as economists across the economic spectrum observe.

“If a legislature or executive can order the central bank to print money,” wrote Thomas L. Hogan of the conservative American Institute for Economic Research in 2020, “then the government can spend without limit …which can lead to hyperinflation and economic disaster as seen in countries such as Zimbabwe, Venezuela, and Argentina.”

That’s a lesson that economists began urging on Trump as he stepped up his attacks on the Fed. “No one’s claiming that central bankers are going to be perfect at their jobs,” Peter Conti-Brown of the Wharton School said recently. “What we’re saying is that they’re going to be better than the alternative. The alternative is setting interest rate policy from the Oval Office, according to the whims of whatever the president wants to see that day. That’s the main alternative to central banking. And that’s what’s under threat today.”

The United States also learned the value of an independent Fed the hard way. For more than three decades after its creation in 1913, the Fed was largely a handmaiden of the U.S. Treasury; the Treasury secretary and comptroller of the currency were ex officio members of its board, and the Treasury secretary presided over its meetings.

That version of the Fed proved unequal to managing macroeconomic policy as the Great Depression deepened. It had few powers with which to set policy, especially with Franklin Roosevelt taking the reins of economic policy in his own hands.

FDR unilaterally took the U.S. off the gold standard in 1933. He would set the price of gold every morning with aides at his bedside, prompting the British economic sage John Maynard Keynes to complain directly to Roosevelt that “the recent gyrations of the dollar” looked to him “like a gold standard on the booze.”

Roosevelt eventually gave up on manipulating the price of gold and consequently the value of the dollar. He also recognized that the nation needed a firmer, professional hand on the monetary faucet. The solution came from the progressive-minded Utah banker Marriner Eccles, whom FDR tasked with remaking the Fed.

Eccles is almost entirely unknown to the public, but he’s revered among economic policy wonks — which explains why his name is on the Fed headquarters building. After FDR appointed him to head the Federal Reserve Board, Eccles oversaw the drafting of the Banking Act of 1935, which centralized monetary policy in the Fed board and gave it new powers to manage the money supply. Eccles remained the board’s chairman until 1948 and remained a board member until 1951.

Despite those reforms, however, the Fed remained tied to political imperatives, chiefly the financing of America’s fiscal needs during World War II, policies firmly under the control of the Treasury. “We are not masters in our own house,” one Fed bank governor lamented.

That began to change in 1950, when the process of paying for war expenses had triggered an inflationary spiral. The consumer price index rose by 17.6% in 1946-47 and another 9.5% the following fiscal year, thanks in part by the end of wartime price controls and the “pegging” of long-term treasury bond rates at 2.5%.

The onset of the Korean War in 1950 threatened more inflation. President Truman insisted on leaving the peg at 2.5% in order to limit the cost of government spending on the new war. Eccles and others on the Fed board feared, however, that keeping the rate from rising above 2.5% would require the Fed to keep buying T-bonds, which pumped more dollars into the money supply and fueled inflation. The Fed wanted to allow rates to rise, which was anathema to the White House.

This concern placed the Fed in open conflict with Truman and his Treasury secretary, his crony John Wesley Snyder. The Fed and Snyder engaged in increasingly acrimonious meetings, after one of which the White House issued a communique that falsely stated that the Fed had agreed to follow the administration’s demands. The Fed then issued its own statement, directly contradicting Truman’s.

Truman maintained publicly that keeping rates low was crucial for the fight against communism. “I hope the Board will … not allow the bottom to drop from under our securities,” Truman said, referring to the decline of treasury prices if the board let rates rise. “If that happens, that is exactly what Mr. Stalin wants.” Eccles, for his part, told Congress that if the Fed were forced to maintain the 2.5% peg, that would make the Fed itself “an engine of inflation.”

The war of words continued, until Assistant Treasury Secretary William McChesney Martin took over negotiations with the Fed from Snyder, who was recovering from surgery. Martin broke the logjam. The result was the Treasury-Fed Accord of March 4, 1951, a landmark document in Federal Reserve history. The accord gave the Fed full rein to manage short-term interest rates in return for its keeping long-term rates within the peg until the end of that year.

Truman appointed Martin as Fed chairman a few weeks later; some saw the appointment as a Treasury takeover, but Martin proved to be a firm advocate of Fed independence. The accord, as explained by Robert L. Hetzel of the Richmond Fed and Ralph Leach, who personally witnessed the 1951 negotiations, “marked the start of the modern Federal Reserve System” and established the central bank’s “dual mandate” of promoting stable prices and maximizing employment.

That doesn’t mean that the Fed rigorously honored its hard-won independence. Fed Chairman Arthur Burns acceded to Richard Nixon’s urging to keep rates low in advance of the 1972 presidential election. It was a disastrous misstep. Inflation soared, especially during the Arab oil embargo, peaking at nearly 15% in 1980.

It fell to Paul Volcker, who became chairman in 1979, to use the Fed’s authority to slay the inflationary beast. Volcker drove the Fed’s key rate nearly to 20%, provoking a recession and a sharp rise in unemployment. But the inflation rate fell back to 3.8% by 1983 and as low as 1.1% in 1986. Volckeer’s actions arguably set the stage for Ronald Reagan’s defeat of Jimmy Carter in 1980, but arguably he could not have taken the stringent measures needed to bring inflation down if he bowed to Carter’s electoral needs.

Former Fed Chair Ben Bernanke set forth the perils of political influence on the Fed in 2020, warning that central banks subjected to political pressure might “overstimulate the economy to achieve short-term … gains.” Those may be “popular at first, and thus helpful in an election campaign, but they are not sustainable and soon evaporate, leaving behind only inflationary pressures that worsen the economy’s longer-term prospects.”

That’s the prospect facing the U.S. as Trump keeps trying to erode the Fed’s independence, insisting on a rate cut no matter the overall economic environment. As it happens, he may get the rate cut he desires, but only because his tariff and immigration policies are sapping America’s economic strength, producing a slump that warrants a reduction.

Where will we go from here? Powell’s term as Fed chair expires next May. He has been admirably protective of the bank’s independence while in office, but it’s a safe bet that his Trump-appointed successor won’t be so solicitous. Harder times for the Fed, and the economy, may lurk over the horizon.

US president’s nomination comes after firing of agency head raised concerns about integrity of US government statistics.

United States President Donald Trump has tapped an economist from a conservative think tank to lead a key statistics agency after firing its previous head over her role in the release of weak employment figures.

Trump said on Monday that he had nominated EJ Antoni, the chief economist at the Heritage Foundation, to lead the Bureau of Labor Statistics (BLS).

“Our Economy is booming, and E.J. will ensure that the Numbers released are HONEST and ACCURATE. I know E.J. Antoni will do an incredible job in this new role. Congratulations E.J.!” Trump wrote on his Truth Social platform.

Trump’s nomination of Antoni, who requires confirmation by the US Senate, comes after his firing of Erika McEntarfer earlier this month raised concerns about US government statistics remaining credible and free of political influence.

Trump justified McEntarfer’s dismissal by claiming, without evidence, that the latest jobs report, which showed sharply slower jobs growth for May and June than previously estimated, had been “rigged” to make him look bad.

At the Heritage Foundation, Antoni, who had called for McEntarfer’s removal shortly before she was fired, has consistently showered Trump with praise.

After Trump’s announcement of a trade deal with Japan last month, Antoni described the agreement as “darn close” to perfect and the US president and his Treasury secretary, Scott Bessent, as “artistic masters”.

Last week, Antoni said in a social media post that there were “better ways to collect, process, and disseminate” economic data, and that the next head of the BLS would need to deliver “accurate data in a timely manner” to rebuild trust in the agency.

Antoni and the Heritage Foundation did not immediately respond to requests for comment.

Antoni’s nomination swiftly drew criticism from economists, who raised concerns about his qualifications and partisan leanings.

Jason Furman, an economist at Harvard Kennedy School who served as an adviser to former US President Barack Obama, called Antoni “completely unqualified”.

“He is an extreme partisan and does not have any relevant expertise. He would be a break from decades of nonpartisan technocrats,” Furman said in a post on X.

Erica Groshen, who led the BLS under Obama, voiced similar concerns.

“So far, what worries me is that the nominee and his work are not well known in the business, academic or public service communities,” Groshen told Al Jazeera.