Economists suggest that heavy-handed immigration policies are contributing to persistent services inflation. By restricting labor supply in immigrant-dependent industries like healthcare and construction, these policies tighten the labor market, leading to higher wage pressures and, consequently, higher consumer prices for services.

Soaring US freight costs are not just about fuel. A key contributing factor is a shrinking supply of truckers, which is partly due to stricter immigration enforcement affecting the availability of drivers crossing the border from Mexico. This labor shortage has helped push shipping rates to unprecedented levels.

A significant stagnation in job growth since May coincides with both new tariff implementations (reducing labor demand) and stricter immigration policies (constraining labor supply). This combination has created a powerful dual shock that has effectively halted job creation in the US economy.

While tariffs affect goods prices, immigration controls are reducing the labor supply, particularly in the service sector. This creates upward wage and price pressure on services, a subtle but significant contributor to overall inflation that is difficult to isolate in real-time data.

In an effort to increase driver supply, major trucking companies supported deregulation that enabled 'CDL mills' to issue licenses with minimal training. This flooded the market, destroying their own pricing power and contributing to a 40% rise in fatal accidents.

The 4-year slump in freight rates ended because a massive number of smaller carriers went out of business, reducing the supply of trucks. This supply-driven recovery created a new equilibrium, raising rates without a corresponding surge in consumer demand, a crucial distinction for economic analysis.

The push for automation in industries like trucking, agriculture, and mining is fundamentally a response to demographic crises and a lack of willing workers for difficult, dangerous jobs. Companies are adopting autonomy out of necessity as their human workforce ages and shrinks.

The US labor market is stuck in a 'low hire, low fire' mode, preventing a more robust recovery. This stagnation is not from a lack of demand but is directly attributed to the combined effects of restrictive immigration controls and the lingering impact of tariffs, which suppress hiring activity and consumer purchasing power.

Restricting immigration halts a key source of labor for essential sectors like agriculture and construction. This drives up consumer costs and could cut GDP by 4-7%, creating a direct path to higher inflation and slower economic growth.