Federal Reserve Chairman Jerome Powell blames influx of illegal immigrants for rising unemployment rate

Federal Reserve Chairman Jerome Powell blamed the migrant crisis for the country’s rising unemployment after cutting the benchmark interest rate by 0.5 percentage point on Wednesday for the first time since the early days of COVID-19.

“If millions of people enter the labor force and 100,000 jobs are created, unemployment will rise,” Powell told reporters, responding to a question about the country’s current monthly job creation.

“So it really depends on what the underlying trend is in terms of volatility of people coming into the country.”

“We understand that there has been a huge influx across borders and that has, in fact, been one of the things that has allowed unemployment to rise,” he said, according to the Wall Street Journal.

“And the other factor is the lower hiring rate, which is something we are also keeping a close eye on. So it depends on what is happening on the supply side.”

Powell’s comments come after the Fed accelerated its plan to cut interest rates (originally thought to be just 0.25 percentage points) due to concerns about rising unemployment and slowing growth in recent months.

The unemployment rate has been rising steadily over the past year, with a particular spike in the spring, according to figures from the U.S. Department of Labor.

After starting the year at 3.7%, in August it stood at 4.2%.

The United States has also been slow to add jobs in recent months, adding a disappointing 142,000 jobs in August, about 20,000 fewer than the projected target.

And in July, just 89,000 were added, the lowest level recorded in the United States since the pandemic.

The labor market assessment took a hit in August when it was revealed that 818,000 fewer jobs were created between March 2023 and 2024 than previously reported.

More than 9 million people have been caught crossing the border into the United States since Biden took office in 2021, which does not include a million more who are believed to have slipped through undetected.

These immigrants have flooded the country from large metropolises to small towns in the interior, occupying many jobs that would otherwise be occupied by manual workers.

The Fed’s decision to cut rates means the board of governors believes unemployment now poses a bigger risk to the economy than inflation.