Goldman Sachs "US GDP Growth Rate Up 0.3%P This Year Due to Increased Immigration Inflow"

GDP Growth Rate Forecast Revised Upward from 2.4% to 2.7%

U.S. investment bank (IB) Goldman Sachs has raised its forecast for the U.S. economic growth rate this year by 0.3 percentage points compared to its previous estimate. It expects growth to be driven by increased employment and consumption due to a rise in immigrant inflows.

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According to major foreign media on the 18th (local time), Goldman Sachs raised its forecast for the annual real gross domestic product (GDP) growth rate for the fourth quarter of 2024 from 2.4% to 2.7%. This is an upward revision of 0.3 percentage points from the previous forecast. The unemployment rate at the end of this year is expected to be 3.8%, down 0.1 percentage points from the previous estimate of 3.9%.

Goldman Sachs expects that the number of immigrants entering the U.S. this year will increase by about 1 million compared to the average year, contributing to economic growth.

Goldman Sachs also analyzed that immigrant inflows were a factor behind the U.S. economy avoiding recession concerns and maintaining solid growth last year. While authorities estimated immigrant inflows at 1.6 million last year, Goldman Sachs estimated a higher figure of 2.5 million.

Ronnie Walker, an economist at Goldman Sachs, explained in a recent investor memo, "One reason why GDP growth was strong in 2023 is that immigration exceeded the recent historical average," adding, "This expanded the labor force and potential GDP growth rate."

Earlier, Jerome Powell, Chair of the U.S. Federal Reserve (Fed), also stated that the solid economic growth rate of 3.1% in the fourth quarter of last year reflected factors such as increased labor market participation due to rising immigration.

As illegal immigration has become a major issue in the U.S. presidential election, attempts to analyze the economic effects of immigrant inflows have been actively conducted recently in the U.S. The Congressional Budget Office (CBO) forecasted in a report released last month that increased immigrant inflows will expand the U.S. labor force by 1.7 million in 2024 and by 5.2 million in 2033, leading to an additional annual GDP growth of 2.1%. It projected that the value added created by immigration will total $7 trillion (approximately 9,345 trillion won) over ten years.