Early evidence suggests that White House policy is shrinking the immigrant labor force, contributing to a broader drawdown in the U.S. labor pool, according to several leading economists.

Economists from financial firms, research institutions, and think tanks told CNBC — and recent analyses confirm — that a sustained reduction in immigrant workers could create long-term risks for the U.S. economy. With America’s native-born workforce aging, fertility rates low, and baby boomers retiring in large numbers, the nation is expected to rely increasingly on immigrants to sustain both population and labor force growth.

“The downward shift in the immigrant labor force is definitive,” said Mark Zandi, chief economist at Moody’s. “There’s no debate what’s going on there.”

Trump’s “Aggressive” Immigration Agenda

President Donald Trump has described his immigration strategy as “very aggressive,” with moves ranging from expanded deportations and the planned end of birthright citizenship to restrictions on asylum. His administration is also preparing to scrap the H-1B visa lottery for specialty occupations like tech, architecture, and law, replacing it with a system that favors higher-wage earners.

Many of these actions face ongoing legal challenges.

Evidence in the Numbers

The Bureau of Labor Statistics (BLS) reports that the foreign-born labor force has declined by 1.2 million since January, falling to 32.1 million in July.

While native-born labor force participation slipped just 0.3 percentage point year-over-year in July, the decline was much steeper among foreign-born workers, who saw a 1.2 percentage point drop, according to a J.P. Morgan analysis.

“Signs are mounting that the foreign-born labor force is shrinking due to the Trump administration’s immigration policies,” wrote Nancy Vanden Houten, lead economist at Oxford Economics, in an Aug. 1 research note.

Stephen Brown, deputy chief North America economist at Capital Economics, called the BLS-reported decline “very dramatic” and larger than anticipated.

“Many immigrants appear to be leaving the labor force,” added David Kelly, chief global strategist at J.P. Morgan Asset Management.

The overall U.S. labor force has contracted by 402,000 people between January and July, down to 170.3 million, according to BLS data, marking three consecutive months of decline.

Crackdowns and Economic Ripples

Some of the shrinkage is linked to policy enforcement. Immigration and Customs Enforcement (ICE) arrests have surged, more than tripling since 2024 to 1,100 per day as of mid-June, according to Oxford Economics.

Matthew Martin, a senior U.S. economist at the firm, found that labor force growth has stagnated in states such as Texas and Florida, where immigrant arrests per capita are highest, while states with fewer crackdowns, like California and New York, have recorded modest gains.

Meanwhile, Jerome Powell, chair of the Federal Reserve, acknowledged immigration as a labor supply constraint: “Because of immigration policy really, the flow into our labor forces is just a great deal slower,” Powell said on July 30.

Sector-Specific Impact

Industries that depend heavily on immigrant labor — hospitality, restaurants, construction, and home health care — have seen flat job growth since early 2025, according to Jed Kolko, senior fellow at the Peterson Institute for International Economics and former Commerce Department official. By contrast, the rest of the private sector grew jobs at a 0.6% pace in July.

A Bank of America Institute report released Tuesday warned of “serious financial risks for contractors” if labor shortages worsen, noting that average wage growth in construction hit 8% in July, nearly double the national average. About 34% of construction workers are immigrants, the report said, with trades like drywall installation approaching 60% immigrant representation.

That shortage already costs the economy $10.8 billion annually in project delays and adds an average of $2,600 to the price of new single-family homes, according to a June analysis by the Home Builders Institute, the National Association of Home Builders, and the University of Denver.

White House Response

In an emailed statement, White House spokesperson Abigail Jackson defended the administration’s policies, insisting that “there is no shortage of American minds and hands to grow our labor force.” She said Trump’s agenda aims to expand job opportunities for U.S.-born workers while enforcing immigration laws.

The administration has also pointed to steps meant to support legal immigrants, including the creation of the Office of Immigration Policy in June to streamline work visa processes, and an April executive order to boost high-paying skilled trade jobs.

Why Economists Are Concerned

A shrinking labor force directly threatens long-term U.S. growth potential. “If we want the type of economic growth that we historically consider successful, then the demographic reality is that we’re going to have to increase inflows of immigrants,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “There’s no real way around that.”

Without immigration, the Congressional Budget Office projects that the U.S. population will begin to shrink by 2033, with low fertility rates exacerbating the trend.

Economists also warn of knock-on effects: fewer workers mean reduced tax revenue for programs like Social Security, and tighter labor markets could drive up wages in ways that stoke inflation.

Still, some argue the labor force contraction may not persist. “We didn’t see net-out migration in [Trump’s] first term,” Strain said. “That’d cause all sorts of problems for businesses, for key sectors of the economy the president cares about, like construction. I’d be surprised if that’s where we end up. But who knows?”

Google on Thursday announced a sweeping global expansion of AI Mode, its conversational search feature that allows users to ask complex questions and follow-ups to dig deeper on a topic directly within Search.

The company is also layering in agentic and personalized capabilities that push AI Mode closer toward becoming a proactive digital assistant, signaling Google’s attempt to fortify its dominance in the AI-powered search space.

As part of the expansion, AI Mode is now available in 180 new countries in English. Until now, the tool was limited to users in the U.S., U.K., and India. Google says it will roll out support for more languages and regions in the near future, reflecting its strategy to move fast and scale AI across its global user base.

A centerpiece of this update is the introduction of agentic features, designed to perform actions on behalf of users. For example, AI Mode can now find restaurant reservations, with plans to extend to local service appointments and event tickets in the coming months. A user can specify dinner preferences — such as party size, date, time, location, and cuisine — and AI Mode will search across different reservation platforms, surfacing a curated list of real-time options.

This capability is currently rolling out for Google AI Ultra subscribers in the U.S. through the “Agentic capabilities in AI Mode” experiment in Labs, Google’s experimental testing ground. Ultra, Google’s top-tier subscription plan, costs $249.99 per month, underscoring the company’s strategy to monetize its most advanced AI features through premium tiers.

Beyond agentic capabilities, Google is also introducing personalized search results within AI Mode. The system will now adapt to individual preferences and interests, starting with dining-related topics. For instance, if a user searches, “I only have an hour, need a quick lunch spot, any suggestions?”, AI Mode will draw on past interactions, prior searches in Google and Maps, and inferred interests to suggest relevant dining options. If the system knows the user prefers Italian food and outdoor seating, those results will be prioritized. Users retain the ability to adjust personalization settings via their Google Account.

Another new addition is collaboration and sharing. A dedicated “Share” button allows users to send an AI Mode response to others, enabling friends, family, or colleagues to join in on the same conversation thread. Google says this could be particularly useful for trip planning or organizing group events, where multiple people need to coordinate within the same AI-driven workflow.

Financial and Competitive Context

This expansion comes as Google faces mounting pressure in the AI race, particularly from OpenAI, Microsoft, and emerging challengers like Anthropic. OpenAI’s ChatGPT continues to dominate consumer mindshare, while Microsoft has aggressively embedded AI into Bing, Office, and Windows. Google is signaling that it intends to defend its core product — Search — from being disrupted by standalone AI assistants by expanding AI Mode to 180 countries.

There is also a financial dimension. Google’s pricing of Ultra at $249.99 per month reflects the enormous compute costs tied to deploying advanced AI models at scale. Training and running large language models requires thousands of high-end GPUs, often from Nvidia, making profitability a challenge across the AI industry. Google, like OpenAI, is walking a tightrope: it must sustain the enormous expense of AI infrastructure while ensuring its monetization model can keep up.

Analysts note that introducing agentic AI features could open up new monetization opportunities beyond subscriptions. For instance, booking restaurants, local services, or event tickets directly within AI Mode could allow Google to take a cut of transactions — something that might gradually transform AI Mode into a commerce and service hub rather than just a search interface.

Meanwhile, personalization and collaboration point toward Google’s longer-term vision of embedding AI deeper into daily life, creating user lock-in at a time when tech rivals are battling for attention and loyalty in the AI-driven future.

The head of Amazon’s push to build artificial general intelligence has shared rare insights on how junior staffers can get ahead in AI, at a time when the global talent war has turned into one of the most expensive battles in the tech industry.

Companies like Meta, OpenAI, and Anthropic have spent the summer aggressively jostling for top AI minds, in some cases dangling compensation packages worth tens of millions of dollars. Analysts say this scramble is one of the most expensive hiring sprees in the history of technology, with Meta in particular reportedly offering star researchers deals so lucrative that they rival the pay of athletes. Mark Zuckerberg has framed this as a “make or break” race for Meta’s future, as the company funnels billions into AI research.

David Luan, the executive leading Amazon’s AGI Lab in San Francisco, told The Verge’s Decoder podcast that he would put fewer than 1,000 people worldwide into the “top AI talent bracket” and trust fewer than 150 with what he described as a “giant dollar amount of compute” at a frontier AI lab.

But he stressed that while the elite circle remains small, it is possible for newcomers to break in quickly if they focus on the right problems. Luan said some junior people could climb the ranks within three to four years by asking the right questions, identifying problems “nobody has the answer to,” and becoming recognized experts in those narrow but critical subdomains.

“I find that really counterintuitive, that there’s only very few people who really know what they’re doing,” Luan said, adding: “It’s very easy in terms of number of years to become someone who knows what they’re doing.”

He noted that junior recruits coming from other demanding disciplines, such as quantitative finance or physics, could make “a massive difference” when they join AI companies—provided colleagues with deep experience in training models surround them.

Luan also advised early-career researchers to prioritize joining smaller AI teams where they could try their own ideas, while ensuring the company has a strong “product sense” of how AI fits into people’s lives.

In addition to heading Amazon’s AGI Lab, Luan is also the company’s vice president of autonomy. He joined Amazon in 2024 after it quasi-acquired his startup, Adept, which had been working on AI models designed to help people complete tasks across software platforms. His definition of artificial general intelligence is broad: “a model that can help a human do anything they want to do on a computer.”

The battle for talent, however, underscores the financial strain that AI ambitions are putting on tech giants. For Meta, the cost of attracting researchers has ballooned alongside the billions it is already burning on compute power. Industry insiders suggest that this level of spending is unsustainable without a clear path to profitable products. OpenAI and Anthropic face similar challenges, while Amazon, which entered the AGI race later, is now trying to leverage its financial muscle and cloud infrastructure to catch up.

Some analysts believe the takeaway from Luan’s remarks is twofold: the AI industry’s success is being bottlenecked by human capital as much as by compute, and the sheer cost of recruiting and retaining these rare talents could reshape how quickly companies like Amazon, Meta, and OpenAI can bring AI breakthroughs to the market.