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Let's turn now to immigration. It's one of many topics former President Trump discussed in his conversation with Elon Musk on X, Trump promising the largest deportations in history if elected come November. Now, this comes amid cracks that we're starting to see in the labor market which caused a week of volatility for markets. But according to the Brookings Institution, US born employment saw a boost in 2023, while foreign born employment also increased more than published data might be indicating. Let's bring Brookings Institution senior fellow in economic studies, Wendy Edelberg for more. Wendy, it's it's great to speak with you. I do just want to start on the comments that we heard from former President Trump last night here, again promising those largest deportations in history. Talk to us from an economic perspective about the implications of a potential policy move like that.

So, generally speaking, the US economy does not do well with abrupt changes of any kind, let alone massive increases in out migration. So, that would have very significant negative effects for labor supply, but it would also affect the communities uh where immigrants live. And those communities would see sharp reductions in demand for their goods and services, sharp reduction in demand for housing. Those communities would be upended, uh schools would have done investment in anticipation of of educating uh immigrants' children and then those students wouldn't be there. This would be uh potentially extraordinarily disruptive for the US economy.

Wendy, talk to us a little bit more just about the dynamics at play. How much immigration has changed those dynamics? And when we take a look at the BLS report that we get on a monthly basis, or take a look at those jobless claims report numbers, how does the factor or or the number of immigrants here in the US today versus what we saw years ago, how how is that affecting how we should be viewing these numbers, meaning 200,000, is that the new base? Should is that maybe not as strong as what initially would have been given a decade ago?

You're absolutely right that the immigration surge should fundamentally change how we interpret the employment report. So, these are very significant increases in labor supply that we've seen. And the result is that if you were coming into 2023, 2024 with the kind of number in mind of like a 100,000 a month in employment gains, uh in payroll job growth is a good number. Now, double that. So, the full employment maximum sustainable place sustainable pace of monthly employment growth is now just shy of 200,000. That's why uh the number that we got for the July employment report of 114,000 uh jobs uh increased on net over the month of July, that number before the pandemic would have been a very nice solid number. But now in the context of the surge in immigration, that number is shy of what is sustainable given full employment.

Well, help me put a bow on this Wendy. Let's say that you were speaking with J. Powell and he was asking you for some insights that you have that we're not necessarily getting from the labor market data to the point that you just made. What is the single biggest data point that you see in your day-to-day that you would want to point him to?

He should be a lot less worried than he might have been about how strong the labor market looks. So now the labor market can actually run at the the three-month pace that we saw of 170,000 over the last three months. That's a perfectly healthy pace for the labor market without putting unwanted pressure on inflation. So he has a lot of reasons for concern and a lot of things in the economy that he's worried about. How strong the labor market is, worrying that it's too strong, that is a concern I wanted to take off his plate.

All right, Wendy Edelberg, great to get your insight here this morning. We appreciate you taking the time, senior fellow with the Brookings Institution. Thanks so much.

Thank you.