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America’s immigration policies are failing

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SO YOU WANT to come to America. Venezuela, your home country, is suffering under Nicolás Maduro’s violent kleptocracy. What to do? Good luck getting a green card: employers won’t bother sponsoring a low-skilled worker like you, and you have no immediate family in America to vouch for you. Your WhatsApp is filled with news of friends who have crossed America’s southern border. You decide to follow them and, after a hellish trip, make it to the Rio Grande. You could try to slip across undetected—about 600,000 “gotaways” managed it last year. Or you can tell the border agents who intercept you that you want asylum. Odds are that they will release you with a court date scheduled in several months’ time, kickstarting a process that may take years. Welcome to America.

In November 2023 nearly 250,000 migrants crossed the southern border. The surge—and the perception that America’s borders are open—is a giant political liability for President Joe Biden. Just 27% of Americans tell pollsters that they approve of his handling of the border. More than twice as many trust Donald Trump on the issue. The fact that surging migration over the southern border could cost Mr Biden the election in November has made the problem trickier to solve. Wrangling over a deal to fund Ukraine in exchange for tighter border security and asylum limits has dragged on for months. Although Senate leaders say an agreement is close, some Republicans—reportedly including Mr Trump—seem to want the border chaos to fester, to better beat Mr Biden over the head with it during the election campaign.

Several factors explain the surge: violence and instability around the globe; plentiful job openings in America; the accurate perception that Mr Biden is more welcoming than his predecessor; and cumbersome, limited pathways to come legally. An overwhelmed border apparatus also invites more crossings, notes David Bier of the Cato Institute, a think-tank. When people hear that they are unlikely to be detained and deported, more try their luck.

Decades of neglect and partisan rancour have crippled America’s immigration system and created a situation where immigrants view asylum-seeking as the surest way to get into the country, rather than a long-shot attempt. Congress last made meaningful reform to immigration law in 1990. Comprehensive, bipartisan reform has seemed close several times since, only to fall apart in the end. In 2006, 2007 and 2013 bipartisan Senate bills included a path to citizenship for undocumented immigrants, more visas for workers and stricter enforcement at the border. In recent years Democrats have largely been animated by the desire to protect daca recipients, immigrants who were brought to America as children, from deportation.

Mr Trump’s candidacy upended the politics of immigration. When he launched his campaign in 2015, the number of migrants apprehended nationwide was at its lowest level since 1971. That fact did not, of course, stop Mr Trump from declaring that migrants threatened the American way of life. (“They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.”) In 2019 irregular entries at the southern border jumped. Mr Trump saw detention as a means of deterrence and made some migrants with pending asylum claims wait in Mexico. At one time during his presidency nearly 57,000 people were detained. The surge was so great that even Mr Trump released a quarter of migrants into the country immediately with a notice to appear (NTA) in immigration court.

Borderline, personalities, disorder

Mr Biden reduced detentions—the number in custody today is around 38,000—and scrapped the requirement to remain in Mexico. He has tried less effective deterrents. His administration wants to steer migrants towards ports of entry where they arrive for appointments made via a smartphone app. Most are admitted with permission to stay for a year or two. By contrast people caught crossing illegally are presumed ineligible for asylum, with a few narrow exceptions, and quickly deported.

Chart: The Economist

At least that is how it is supposed to work. In reality most migrants who cross illegally are still being released into the country, and irregular arrivals far exceed those at official crossings. Once on American soil a migrant can request asylum, which involves a screening with an asylum officer. Because of Mr Biden’s reluctance to pursue detention and an insufficient number of asylum officers, in November seven in ten were handed an NTA and sent on their way.

Last year the Biden administration also began granting parole to up to 30,000 Cubans, Haitians, Nicaraguans and Venezuelans each month, if applicants identified a financial sponsor in America. Again the goal was to make flows more orderly and decrease illegal arrivals. Permission to stay lasts two years but can be revoked at any time. Illegal crossings by Haitians, Nicaraguans and Cubans plummeted. But Venezuelans, who are less likely to have social ties to America, continue to enter illegally. “Most of the Venezuelans arriving now don’t have family, friends, relatives,” says Theresa Cardinal Brown, who served in the Department for Homeland Security in the Bush and Obama administrations.

Once across the border, migrants head to cities. Shelter systems in New York City, Chicago and Denver are overwhelmed and their mayors want Mr Biden’s help. This is partly the doing of Greg Abbott, the Republican governor of Texas, who is busing migrants to Democratic-run cities. But big cities are also natural magnets for migrants.

With an NTA in hand, new arrivals enter the court system, where the backlog is growing faster than judges can keep up. Cases in immigration court surpassed 3m in November. It takes more than four years on average just to get an initial asylum hearing. Doubling the number of judges would clear the backlog—but only by 2032, according to an estimate from the Congressional Research Service.

Half of asylum cases are denied, and decisions are inconsistent. One judge in Houston denied 95% of her asylum cases last year; another in San Francisco denied just 1% of hers. But the immense wait, low chance of detention and the prospect of work in America encourage migrants with a weak claim to cross the border. Prioritising the most recent arrivals’ cases would reduce this incentive, notes Stephen Yale-Loehr of Cornell Law School. A long journey seems less worth it if the reward is deportation rather than an NTA.

The looming election, Mr Trump’s perceived strength on border issues and Mr Biden’s desire to arm Ukraine mean that the president wants to make a deal. His openness to tougher border enforcement is also no doubt fuelled by Americans’ rightward turn on immigration. Polling from YouGov suggests that more Americans favour building a southern border wall than don’t. Even 32% of Democrats now say they support the idea, up from 20% in 2022.

Whether the House and the Senate can agree on reform is questionable. A deal may include funding for more Border Patrol agents, the ability to shut down migrant intake if encounters reach a certain level, a higher bar for migrants to pass their interview—so that they are not released into the country unless they are likely to actually receive asylum—and limits on parole. Any changes to asylum rules will almost certainly be challenged in the courts.

But House Republicans have waffled, often insisting that they would accept nothing other than HR2, a hardline immigration bill passed along party lines last year that would be dead on arrival in the Senate. On the left, progressives do not want to tighten access to asylum. Both groups should beware. A new poll from The Economist and YouGov suggests that a plurality of Americans want Congress to pass a bill that both funds Ukraine and restricts asylum. The politicians should not ignore their voters.

Stay on top of American politics with Checks and Balance, our weekly subscriber-only newsletter, which examines the state of American democracy and the issues that matter to voters.

Economics

The low-end consumer is about to feel the pinch as Trump restarts student loan collections

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Wall Street is warning that the U.S. Department of Education’s crack down on student loan repayments may take billions of dollars out of consumers’ pockets and hit low income Americans particularly hard.

The department has restarted collections on defaulted student loans under President Donald Trump this month. For first time in around five years, borrowers who haven’t kept up with their bills could see their wages taken or face other punishments.

Using a range of interest rates and lengths of repayment plans, JPMorgan estimated that disposable personal income could be collectively cut by between $3.1 billion and $8.5 billion every month due to collections, according to Murat Tasci, senior U.S. economist at the bank and a Cleveland Federal Reserve alum.

If that all surfaced in one quarter, collections on defaulted and seriously delinquent loans alone would slash between 0.7% and 1.8% from disposable personal income year-over-year, he said.

This policy change may strain consumers who are already stressed out by Trump’s tariff plan and high prices from years of runaway inflation. These factors can help explain why closely followed consumer sentiment data compiled by the University of Michigan has been hitting some of its lowest levels in its seven-decade history in the past two months.

“You have a number of these pressure points rising,” said Jeffrey Roach, chief economist at LPL Financial. “Perhaps in aggregate, it’s enough to quash some of these spending numbers.”

Bank of America said this push to collect could particularly weigh on groups that are on more precarious financial footing. “We believe resumption of student loan payments will have knock-on effects on broader consumer finances, most especially for the subprime consumer segment,” Bank of America analyst Mihir Bhatia wrote to clients.

Economic impact

Student loans account for just 9% of all outstanding consumer debt, according to Bank of America. But when excluding mortgages, that share shoots up to 30%.

Total outstanding student loan debt sat at $1.6 trillion at the end of March, an increase of half a trillion dollars in the last decade.

The New York Fed estimates that nearly one of every four borrowers required to make payments are currently behind. When the federal government began reporting loans as delinquent in the first quarter of this year, the share of debt holders in this boat jumped up to 8% from around 0.5% in the prior three-month period.

To be sure, delinquency is not the same thing as default. Delinquency refers to any loan with a past-due payment, while defaulting is more specific and tied to not making a delayed payment with a period of time set by the provider. The latter is considered more serious and carries consequences such as wage garnishment. If seriously delinquent borrowers also defaulted, JPMorgan projected that almost 25% of all student loans would be in the latter category.

JPMorgan’s Tasci pointed out that not all borrowers have wages or Social Security earnings to take, which can mitigate the firm’s total estimates. Some borrowers may resume payments with collections beginning, though Tasci noted that would likely also eat into discretionary spending.

Trump’s promise to reduce taxes on overtime and tips, if successful, could also help erase some effects of wage garnishment on poorer Americans.

Still, the expected hit to discretionary income is worrisome as Wall Street wonders if the economy can skirt a recession. Much hope has been placed on the ability of consumers to keep spending even if higher tariffs push product prices higher or if the labor market weakens.

LPL’s Roach sees this as less of an issue. He said the postpandemic economy has largely been propped up by high-income earners, who have done the bulk of the spending. This means the tide-change for student loan holders may not hurt the macroeconomic picture too much, he said.

“It’s hard to say if there’s a consensus view on this yet,” Roach said. “But I would say the student loan story is not as important as perhaps some of the other stories, just because those who hold student loans are not necessarily the drivers of the overall economy.”

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Economics

Consumer sentiment falls in May as Americans’ inflation expectations jump after tariffs

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A woman walks in an aisle of a Walmart supermarket in Houston, Texas, on May 15, 2025.

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U.S. consumers are becoming increasingly worried that tariffs will lead to higher inflation, according to a University of Michigan survey released Friday.

The index of consumer sentiment dropped to 50.8, down from 52.2 in April, in the preliminary reading for May. That is the second-lowest reading on record, behind June 2022.

The outlook for price changes also moved in the wrong direction. Year-ahead inflation expectations rose to 7.3% from 6.5% last month, while long-term inflation expectations ticked up to 4.6% from 4.4%.

However, the majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries. The trade situation appears to be a key factor weighing on consumer sentiment.

“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” Surveys of Consumers director Joanne Hsu said in the release.

Inflation expectations are closely watched by investors and policymakers. Federal Reserve Chair Jerome Powell has said the central bank wants to make sure long-term inflation expectations do not rise because of tariffs before resuming rate cuts.

A final consumer sentiment index for the month is slated to be released on May 30, and will likely be closely watched to see if the tariff pause led to an improvement in sentiment.

This is breaking news. Please refresh for updates.

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Economics

JPMorgan Chase CEO Jamie Dimon says recession is still on the table for U.S.

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Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during the 2025 National Retirement Summit in Washington, DC, US, on Wednesday, March 12, 2025.

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Wall Street titan Jamie Dimon said Thursday that a recession is still a serious possibility for the United States, even after the recent rollback of tariffs on China.

“If there’s a recession, I don’t know how big it will be or how long it will last. Hopefully we’ll avoid it, but I wouldn’t take it off the table at this point,” the JPMorgan Chase CEO said in an interview with Bloomberg Television.

Specifically, Dimon said he would defer to his bank’s economists, who put recession odds at close to a toss-up. Michael Feroli, the firm’s chief U.S. economist, said in a note to clients on Tuesday that the recession outlook is “still elevated, but now below 50%.”

Dimon’s comments come less than a week after the U.S. and China announced that they were sharply reducing tariffs on one another for 90 days. The U.S. has also implemented a 90-day pause for many tariffs on other nations.

Thursday’s comments mark a change for Dimon, who said last month before the China truce that a recession was likely.

He also said there is still “uncertainty” on the tariff front but the pauses are a positive for the economy and market.

“I think the right thing to do is to back off some of that stuff and engage in conversation,” Dimon said.

However, even with the tariff pauses, the import taxes on goods entering the United States are now sharply higher than they were last year and could cause economic damage, according to Dimon.

“Even at this level, you see people holding back on investment and thinking through what they want to do,” Dimon said.

— CNBC’s Michael Bloom contributed reporting.

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