Apart from tariffs and tax cuts, immigration has been the other focus of the current US administration’s policies. It has been a major driver of the labor force and thus economic growth post the pandemic. The CBO estimates the net number of people who entered the US was 2.8mn in 2022, 3.3mn in 2023 and 2.7mn in 2024. This far exceeded the 0.9mn annual average from 2010-2019. In January, it projected a decline to 1.5mn in 2026 and 1.1mn annual average from 2027-2055 (Figure 1). Even this fall could be an underestimate given the new immigration control policies. The impact will be first seen as lower employment (May ADP employment addition just printed below expectation) and then growth (Figure 2).
This alongside the direct and indirect impact of tariffs, former through still-higher-than-before rates and latter through higher uncertainty & lower sentiment, will impact growth through consumption and investment. Expectation of rate cuts by the Fed could also rise if hard data deteriorates. Thus, despite the recent rise in US fiscal trajectory, US treasury bond yields should eventually ease, and the USD drag.
Source for the charts: US Congressional Budget Office (CBO), Peterson Institute For International Economics.
Disclaimer:
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of Bandhan Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the security, if any, may or may not continue to form part of the scheme’s portfolio in future. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement/document as may be required from time to time. Neither Bandhan Mutual Fund / Bandhan Mutual Fund Trustee Limited / Bandhan AMC Limited, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Past performance may or may not be sustained in future.