"Trump's Iron-Fisted Immigration Expulsion" Economist: Labor Force Deterioration, Inflation Rate Expected to Soar Near 4% Next Year as Self-Inflicted Consequence

Moody's chief economist warns that Trump's large-scale immigration deportation policy could push inflation in the U.S. to 4% next year, presenting a tricky policy dilemma for the Federal Reserve. (Previous context: Trump predicts he will announce tariffs on steel and semiconductors as early as next week! Bitcoin falls below $118,000, Ether loses $4,600) (Background information: U.S. July PPI explosion > Bitcoin Long Wick Candle $117,000, Trump's tariffs sound the alarm for inflation, will the Fed lower interest rates in September?) The immigration deportation actions promoted by President Trump since taking office are pushing the economy toward an invisible warning line. Moody's (Moody’s) chief economist Mark Zandi warned earlier this week that if the U.S. maintains an average deportation rate of 750 people per day, the inflation rate may approach 4% as early as the beginning of 2026, higher than the Fed's (Fed) target range. Wall Street investors are therefore concerned that the U.S. may repeat the 'high prices, low growth' scenario of the 1970s. Labor supply contraction, price pressure simultaneously rises Zandi explained that immigration deportation directly squeezes labor supply, causing companies to pay higher wages to compete for workers, ultimately raising production and service costs. He pointed out: the foreign-born labor force is declining, and the overall labor force has been flat since the beginning of the year. Cost pressures are slowly being reflected in inflation data, such as the Producer Price Index (PPI) for July released by the U.S. Department of Labor this Thursday, which was significantly higher than expected, with service cost increases accounting for three-quarters, and prices for fresh and dried vegetables soaring nearly 40%. The Fed is in a dilemma, raising interest rates does not solve labor shortages The current inflation is a typical supply-side shock, and the Fed's traditional tools appear inadequate. Zandi emphasized: 'Lowering interest rates will not bring more immigrants to the country.' If the Fed raises interest rates to control prices, the rising borrowing costs may suppress investment and consumption, exacerbating economic slowdown. Conversely, if they remain inactive, inflation may run rampant. This type of dilemma adds more uncertainty to the Fed's decision-making. Policy choices test the long-term momentum of the U.S. economy Immigration has traditionally supported U.S. industries such as technology research and development, agriculture, and construction. If supply is long-term constrained, not only will prices rise, but it may also drain innovation and production potential. The Trump administration adheres to the political appeal of 'America First,' but when politics overrides economic calculations, it becomes more difficult to balance labor and prices. In the future, Washington must find a solution that balances protecting domestic workers and maintaining economic vitality; otherwise, the dual pressure of inflation and growth may become an enduring cloud over the next few years. At present, the market is waiting for the Fed's September meeting to provide direction; in the long run, if immigration policy does not undergo a 'rational shift,' the 4% inflation that Zandi predicts may just be the beginning. This tug-of-war over labor and prices is determining the direction of the next economic cycle in the U.S. Related reports Harvard University leads, which well-known U.S. universities are betting on crypto assets? Former Bureau of Labor Statistics chief: suggests pausing U.S. non-farm employment monthly report, Wall Street overwhelmingly opposes: self-destructing Korean-American Tom Lee brings the 'coin-stock' wind to Korea 'Trump's iron-fisted deportation of immigrants' economists: labor deterioration, inflation rate could soar close to 4% self-inflicted harm> This article was first published in BlockTempo, the most influential Blockchain news media.