Mark Zandi, chief economist at Moody’s, attributes President Donald Trump‘s immigration policies to a high unemployment rate among American workers. He also blamed the administration for other supply-side policy shocks.
Zandi observed a drop in foreign-born unemployment to a level below that of native-born Americans in October 2025. The economist told Fortune that he expects a policy shift regarding immigration in the future. However, he cautions about immediate stagflationary impacts on the labor market, predicting price increases without corresponding output growth.
“The supply-side stagflationary shock of tariffs does the same thing,” Zandi said. He added that the economy is facing three major policy-driven supply shocks that are slowing growth and raising inflation, citing the war in Iran as another supply shock.
“The only reason why the economy isn’t in complete shambles is because of AI,” he said.
Zandi attributes the rise in native-born unemployment to a general decrease in labour demand. He suggests that if U.S.-born workers now make up a larger portion of the labor force, they will be more affected by demand fluctuations. He also emphasizes the lack of skills and knowledge of jobs traditionally held by immigrants among native-born workers.
“These jobs are typically ones that are very difficult, very arduous jobs that require a lot of physical hardship, and the native-born workers just haven’t done these jobs for quite some time and are in no mood to take them now—certainly not at these wages,” Zandi told Fortune.
Read Also: US Economy Loses 23,000 Jobs, Gold Jumps 3%: What Do Prediction Markets Say About Rate Hikes?
Farm Labor Shortage Risks Food Prices
The U.S. unemployment rate fell to 4.1% in July even as employers shed 23,000 jobs. The labor force participation rate fell to 61.4% in July, its lowest level since February 2021. This means the unemployment rate improved not because more Americans found jobs, but partly because fewer people were working or actively looking for work.
Zandi’s remarks echoed the Labor Department’s earlier warning, according to which the Trump administration’s immigration crackdown could worsen farmworker shortages, disrupt U.S. agriculture and lead to food shortages and higher prices.
The Labor Department said U.S. workers are unlikely to replace foreign farm labor due to the physically demanding work and harsh conditions. Foreign-born workers account for about 38% of farming, fishing and forestry jobs, while 42% of crop workers could be unavailable amid the immigration crackdown.
Wage Gains Still Lag Economic Growth
Economist Mihir Torsekar argued that the U.S. affordability crisis is less about high prices and more about stagnant wages, with worker pay failing to keep pace with economic growth and corporate profitability for decades. While real average hourly earnings rose 1.4% from February 2025 to February 2026, he argues the increase remains modest relative to the broader economic gap, leaving many households financially stretched and increasingly reliant on high-interest credit.
Meanwhile, the White House argues Trump’s immigration policies are boosting American wages, particularly in construction, manufacturing and transportation. New York Fed data offers some support, noting strong wage growth in construction and mining, driven partly by AI data-center demand and policy changes.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
.jpeg?w=600)
