Amidst global economic slowdown, U.S. economy strengthens
Increased immigrants bolster production, employment, and consumption
Despite various side effects, positive functions are clear
Lessons for Korea, a country with aging and demographic Cliff
While major economies worldwide grapple with long-term high-interest rates and inflation, the U.S. economy continues to boom, with many indicators pointing to continued strength. Economists attribute this to high productivity, employment rates, and robust consumption, with a significant influence of immigrants on these indicators.
The International Monetary Fund released a revised global economic outlook. Although this year’s global economic growth rate was only 0.1 percentage points higher than the forecast in January, the U.S. increased by 0.6 percentage points from 2.1% to 2.7%. This contrasts with France and Germany, whose growth rate forecasts were adjusted downward by 0.3 percentage points.
The Federal Reserve Bank of Atlanta’s GDP Now, a growth rate model, also revised this year’s U.S. growth rate forecast from 2.4% to 2.8%.
The U.S. Department of Commerce announced on the 15th that retail sales in March increased by 0.7% compared to the previous month, surpassing the market expectation of 0.4%. The increase rate in February was also adjusted upward from 0.6% to 0.9%.
The monthly retail sales index is a statistic that mainly aggregates the sales performance of goods as a percentage of total consumption. It is considered an indicator to gauge changes in consumption, the backbone of the U.S. economy.
The U.S. unemployment rate, at 3.8% last month, was close to full employment. The U.S., which has maintained an unemployment rate below 4% for two years, has fully recovered to pre-COVID-19 levels and is continuing an unprecedented boom in the labor market.
Many economic experts credit immigrants for the U.S. economy’s dominantly strong performance. They have taken on low-quality jobs, reducing wage and price inflation pressures. They not only prevent the collapse of the labor market but also play a significant role in the consumer market.
According to the Congressional Budget Office (CBO), the U.S. labor force is expected to increase by 1.7 million more than expected this year due to an increase in immigrants. The CBO determined that a high immigration rate could increase the U.S. average annual GDP growth rate by 0.2 percentage points over the next decade.
The U.S. is a consumer powerhouse, with consumption accounting for nearly 70% of GDP. It’s a country where the economy grows as consumption increases.
Park Moon Gyu, Deputy Consul General of the Consulate General of the Republic of Korea in New York, said at a meeting with the G20 Annual Meeting’s accompanying press corps on the 18th (local time), “The CBO announced the number of immigrants in January, and it increased to 3.3 million compared to last year. Economic refugees were about 1 million a year but have more than doubled since 2022.”
Deputy Consul General Park added, “The U.S. labor force has been in short supply compared to demand, and aging of the labor force has also been a problem, but the steady influx of immigrants has offset these problems. Hardworking immigrants have firmly supported the low-wage base, so employment is still strong.”
According to Deputy Consul General Park, immigrants are now considered essential personnel in construction and transportation. Of New York City’s population of 8.4 million, approximately 3.3 million are immigrants.” Among the immigrants, about 900,000 are legal, and the rest are undocumented.
Deputy Consul General Park emphasized, “Even undocumented immigrants work, and their economic impact in New York is enormous. Although undocumented, they pay taxes, contribute to consumption, and help hold wages.”
One reason there are many undocumented immigrants in the U.S., especially in New York, is that the government legally guarantees them the Right to Shelter. Also, U.S. federal law and New York state law stipulate the right to receive education for free, regardless of immigration status. Thanks to this, children can attend school from temporary shelters despite their unstable legal status as immigrants.
There are also problems associated with illegal immigrants. The most significant is the financial loss due to providing shelter. Feeling the financial burden, New York established restrictive regulations on temporary housing provided to immigrants last October. Due to financial constraints, immigrant families with children cannot stay in one shelter for more than 60 days.
Issues of language barrier and social conflict need to be resolved. The urban slum problem caused by illegal immigrants is sensitive enough to be a significant issue in the U.S. presidential election.
Despite these problems, it’s worth noting that the U.S. is finding solutions to common problems in most developed countries, such as an aging society and a decrease in the labor force through immigrants. In particular, South Korea, which is on the brink of population extinction, can learn from the U.S. immigration policy.
Woo Byong Yol, Director of the Migration Research & Training Centre, argued, “Korea has many employment-based immigrants, especially new ones. The fiscal effect of immigration in Korea can be even more positive.”
Director Woo emphasized, “Ensuring that immigrants and their children can demonstrate their capabilities without being discouraged by hatred and discrimination is ultimately an investment in our future.”
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