Professor Dawn McLaren , an economist at Arizona State University, has spent the last decade correlating the number of illegal immigrants nabbed crossing from Mexico and the growth of the US economy. According to McLaren, the number of apprehensions is a leading indicator, one year out, of the growth of the US economy. Illegal immigrants hold some of the most marginal jobs, and are the first to be let go during economic downturns. Word of the impending downturn quickly filters throughout the immigrant community waiting to cross, which results in fewer border apprehensions because fewer people are trying to cross. According to McLaren's statistics, US Border Patrol agents are nabbing 30% fewer illegal immigrants, indicating fewer people are chancing the trip because fewer jobs are available once they do get across. McLaren's research posits a direct correlation between fewer apprehensions since the end of 2005 and the slowing US economy, 1.3% growth rate for 1Q 2007. The downturn in the construction sector has had a huge downward impact on the number of Hispanic illegal immigrants trying to cross, resulting in fewer apprehensions.
A related unofficial indicator is the amount of money immigrants wire home every week, particularly to Latin America. According to statistics gathered by the Inter-American Development Bank, workers in the US are wiring much less money back to Latin America. After rising as much as 20 per year, the amount of money wired home is rising only in single digits in 2007. In 2006, immigrant workers remitted over $62 billion to their families. The slowdown in the construction sector has affected employment and the earnings of immigrants workers, and increased enforcement of immigration laws has also hurt would-be border crossers. Economic officials throughout Latin America are concerned that even a small decrease in remittances would wreck havoc on the economies of El Salvador, Honduras, and other remittance-dependent countries. These two pieces of economic information may be the equivalent of canaries in the coal mines.











Reader Comments (Page 1 of 1)
5-17-2007 @ 7:07AM
Michael Schneider said...
Very interesting item and it will be interesting to see what happens.
It may be that the great influx of illegal workers in the US will explain why the slowdown in housing hasn't appeared elsewhere in the economic numbers yet-- instead of being spent here, the money the illegals would have earned would have been sent home anyway. As a result, impact on other sectors is delayed or lessened. Instead of just being an indicator, in other words, the rise of illegal workers could be a causal force in slowing the spread of housing- both obfuscating possible impact and maybe lessening the spread of the slowdown.
Dr. Michael Schneider is webmaster at http://www.Barrelomoney.com.