President Joe Biden’s mass migration policy is causing an increase in housing inflation, leading to higher interest rates and mortgage rates, as reported by the Wall Street Journal. Housing prices were expected to decrease with the influx of new apartments and homes, but this has not been the case according to Austan Goolsbee, president of the Federal Reserve Bank of Chicago. Goolsbee believes that if the housing market does not adjust, it will be challenging to bring inflation back down to the target rate of 2 percent.
The surge of migrants into the country is quickly absorbing the new housing supply, diverting investment away from machinery, automation, and training, which would benefit American productivity and wages. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, echoes Goolsbee’s concerns about the impact of increased immigration on inflation and interest rates.
Since 2021, Biden’s administration has brought in over 10 million legal, illegal, and quasi-legal migrants through various channels, leading to a significant demand shock in the economy. This influx has created an economic boom for various industries, but also puts pressure on interest rates and inflation.
To combat the inflation caused by migration, the Federal Reserve has raised interest rates significantly since early 2022. The rising mortgage rates are impacting homeowners, landlords, and renters alike. Younger Americans are bearing the brunt of these cost increases, making it more difficult for them to own homes in the future.
The shift of investment dollars from productive workplaces to housing is affecting Americans’ ability to increase productivity at work. Larry Fink of BlackRock warns about the negative impact of migration on productivity and wealth, as well as the potential for declining populations to drive technological innovation in countries like China and Japan.
Additionally, migration is impacting wages in the US, with an influx of labor decreasing wages for American workers, according to Kristalina Georgieva of the International Monetary Fund. The overall effect of Biden’s migration policy is driving up housing costs, inflation, and interest rates, ultimately impacting younger Americans’ ability to own homes and invest in their futures.
