Mark Zandi, the chief economist at Moody’s, has issued a warning that the immigration policies of President Donald Trump could potentially cause inflation to rise from the current 2.5% to almost 4% by the start of next year.
Zandi Links Rising Inflation To Trump's Immigration Policy
The White House is reportedly deporting an average of 750 immigrants daily, a move Zandi believes is contributing to rising costs and inflation, reported Fortune.
Zandi's outlook draws on recent inflation trends and a shrinking foreign-born labor force. The Labor Department noted a 0.9% rise in the producer price index (PPI) between June and July — the sharpest increase since 2021 — which Zandi partly links to Trump's immigration policies.
The chief economist said, foreign-born workforce is shrinking, and overall labor force growth has stalled since the start of the year. "That's causing tightening in a lot of markets, adding to costs and inflation,” added Zandi.
The economist argues that immigration restrictions are driving up costs across industries reliant on immigrant labor — from construction and agriculture to retail and elder care. He points to soaring prices in vegetables, meat, food processing, and even services like haircuts and dry cleaning as clear signs of these policies' impact on inflation.
The White House, however, denies the claim that deportations are driving inflation. Spokesperson Abigail Jackson stated that the administration is focused on tapping into the “untapped potential” of the domestic workforce. “100% of job gains have gone to native-born American workers,” added Jackson.
Despite this, some economists, including Steve Moore from the Heritage Foundation, have expressed concerns over a potential labor shortage due to the deportation of illegal immigrants. Zandi believes that easing immigration restrictions could help bring inflation down.
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Rising Prices And Weak Sentiment Add to Recession Fears
The impact of the immigration policies on the economy has been a topic of concern for some time. In June 2025, Deutsche Bank warned that the ongoing immigration crackdown could cause a more severe negative supply shock to the economy than Trump’s tariffs.
Earlier in August, Zandi had warned that the US economy was on the “precipice of recession,” citing disappointing economic data releases.
Furthermore, consumer sentiment unexpectedly cooled in August as concerns over inflation reemerged and weighed heavily on household confidence, as reported by the University of Michigan’s Consumer Sentiment Index. This coincides with the surge in U.S. producer prices in July at the sharpest pace since mid-2022, reigniting concerns over inflation persistence.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
