Birdnow's Aviary

May 30, 2024

Fed Head; Immigration is the Root of our Economic Woes

Timothy Birdnow

The head of the Minneapolis Federal Reserve says immigration is driving high interest rates and high housing costs and keeping inflation up.

Kashkari said that "dramatic increase in immigration” is boosting housing demand. More people working from home and years of underbuilding aren’t helping either. It’s a perfect storm that’s keeping the housing market red-hot.

"[If the] dramatic increase in immigration were to be sustained, I think it would have a meaningful imprint on the economy,’ Kashkari told the Telegraph.

"Housing is traditionally the most interest-rate sensitive sector of the economy. And it has shown remarkable resilience and even some evidence that new leases are ticking back up,” Kashkari said. "That’s also particularly concerning because when we do the math, it takes a year or more for new leases to translate into the actual measured inflation number. And if new leases are now ticking back up, that’s particularly concerning.”

Kashkari argued that the U.S. had under-built homes in the decade that followed the financial crisis and the bursting of the mortgage bubble, creating a shortage of homes. At the same time, there has been increased demand for housing after the pandemic.

"And then we have a big surge in immigration in the last few years. They obviously need a place to live. All of these factors could be propping up demand for housing,” Kashkari added.

Posted by: Timothy Birdnow at 10:14 AM | Comments (4) | Add Comment
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1 Totally agree, but I wonder how anybody in the gummint in Minneapolis got so smart?

Posted by: Dana Mathewson at May 30, 2024 11:49 PM (KPMaG)

2 Hehehe....me too Dana. But then the fellow probably camefrom OUTSIDE your state (as did you.)

Posted by: Timothy Birdnow at May 31, 2024 07:16 AM (mGyBi)

3 Or else he showed up around the time I did, when Arne Carlson was the guv and things were going nicely. Carlson was a Republican and knew what he was doing and so (presumable) did some of the other dudes.

Posted by: Dana Mathewson at May 31, 2024 10:59 PM (lIkkw)