Will deportations end the jobs report caravan?
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QUICK FIX
With that out of the way… it's jobs day.
A surge of immigrants boosted the labor market and helped cool inflation during Joe Biden's administration. Under Donald Trump, the flow of new workers could become a trickle.
Economists say that a striking percentage of the job growth under Biden consisted of immigrant workers — with one major bank recently estimating they accounted for as much as two-thirds of the net gains in the past year.
The Labor Department will issue the first jobs report under Trump 2.0 on Friday morning, and economists expect it will reflect the monthly payroll increases and low unemployment that characterized Biden's labor market. But if Trump delivers on his pledge to shut down the border and conduct mass deportations, a critical supply of workers would be shut off.
'What happens to net immigration over 2025 is a game changer for what we should expect to see in the payroll employment numbers,' said Wendy Edelberg, a former top economist at the Congressional Budget Office who's now the director of The Hamilton Project and a Brookings Institution senior fellow. 'We should get used to much, much smaller numbers than what we've seen over the last couple of years.'
Trump says his sweeping agenda of deregulation, increased oil production and lower taxes will unlock growth and beat back inflation — an argument strongly endorsed by the American people in the election. But the broad-based crackdown on immigrants could threaten to do the opposite, slowing the economy's expansion and choking off a supply of workers that Kansas City Fed researchers and others say alleviated staffing shortages and dampened wage pressures. No matter what, many Wall Street analysts expect job growth to slow.
Steve Englander, the head of global G10 FX research and North American macro strategy at Standard Chartered Bank, says immigrant workers on temporary permits — including those who are on parole or seeking asylum — may have accounted for as much as two-thirds of the expansion in non-farm payrolls over the last year.
'It's not clear if it's going to be immediate — or in the next six to nine months — but by the end of the year it should be noticeable,' he said of the impact of Trump's border crackdown.
It's FRIDAY — The Philadelphia Eagles and Kansas City Chiefs are both responsible for a lot of San Francisco 49ers postseason heartbreak. At least Dry January is over. For econ policy thoughts, Wall Street tips, personnel moves or general thoughts, email Sam at ssutton@politico.com.
Driving The Day
Labor will release the January jobs report at 8:30 a.m. … Fed Gov. Adriana Kugler will discuss productivity at the 2025 Miami Economic Forum at noon …
One more thing on the jobs report — The January report will incorporate new estimates from the Census Bureau that are likely to reflect a large spike in the population. Jed Kolko, the former under secretary for economic affairs at Commerce, in a blog post estimated the 'employment level and the labor force in the household survey are likely to be almost 2 million higher' than what was reflected in the December jobs report. Edelberg's team has also estimated a huge spike.
— So if you see any month-to-month comparisons suggesting that the working population surged — or that size of the labor force has somehow inflated overnight — bear in mind it's a reflection of new Census estimates.
Of DOGE and Treasury — Treasury Secretary Scott Bessent gave an interview to Bloomberg's Saleha Mohsin on Thursday and insisted that Elon Musk's Department of Government Efficiency was not 'tinkering' with disbursements flowing through the Department's sensitive payment rails, Michael Stratford reports.
— The reality, at least until Treasury and federal employee unions reached an agreement to limit DOGE's access, may have been a bit more complicated. Bessent Chief of Staff Dan Katz emailed a small group of Treasury officials on Jan. 24 that a team led by Tom Krause — a software executive, DOGE affiliate and new Treasury staffer — needed access to the payment rails in order to pause USAID payments in compliance with Trump's executive order, according to The New York Times. 'To the extent permitted by law, we would like to implement the pause as soon as possible in order to ensure that we are doing our role to comply with the E.O.,' Katz wrote.
— Recall, Bessent had told lawmakers earlier this week that Krause's work involved an 'operational efficiency assessment' of Treasury's payment systems.
— As Bloomberg's Ted Mann, Nancy Cook, Saleha Mohsin, Emily Birnbaum, and Billy House reported: 'Bessent, a figure of the traditional finance world, is more on board with the Musk crew's mission than has been widely understood.'
— But cracks around DOGE's efforts at Treasury are starting to show. Marko Elez, the 25-year-old Musk aide who'd been focused on federal spending on the payment rails, resigned on Thursday after The WSJ asked the White House for comment on a series of racist social media posts from an account linked to the programmer.
And Democrats are starting to perk up — After flailing for weeks, a series of new polls is buoying the minority party's hopes that Musk's actions at DOGE may have created a political opening that will resonate with voters, Ally Mutnick, Holly Otterbein, your host and Lisa Kashinsky report. 'If you oppose Donald Trump, making Elon Musk the face of his administration is the smart way to go,' said Democratic pollster Geoff Garin. 'Where the rubber really hits the road on all of this is for people who are inclined to be supportive of Donald Trump and they, for whatever reason, think Donald Trump is on their side. But many of them have a different view of Elon Musk.'
On the Hill
Everyone knows this tune, so let's get up and dance— Trump laid out his tax priorities for House Republicans at the White House on Thursday. They include his campaign staples like no taxes on tips, no taxes on Social Security and [record scratch] ending the 'carried interest deduction loophole,' Benjamin Guggenheim and Meredith Lee Hill report.
— Trump's 2017 tax law extended the number of years that private equity firms and other investors need to own an asset before qualifying for a lower, long-term capital gains rate. Drew Maloney, the president and CEO of the American Investment Council, said in a statement that policymakers should 'keep this sound tax policy in place and unleash more long-term investment that supports jobs, workers, small businesses, and local communities.'
Stablecoins — One day after Sen. Bill Hagerty (R-Tenn.) introduced stablecoin legislation, House Financial Services Chair French Hill (R-Ark.) and Rep. Bryan Steil (R-Wis.) unveiled their own bill to regulate dollar-pegged digital tokens, Jasper Goodman reports.
Biden's regulators — Also from Jasper: 'House Financial Services Republicans on Thursday took aim at regulatory practices they say the previous administration used to pressure banks not to do business with the cryptocurrency industry.'
Gambling titans on the hot seat — Four days before the busiest sports gambling day of the year, Reps. Nikema Williams (D-Ga.), Buddy Carter (R-Ga.), Darrell Issa (R-Calif.) and Lucy McBath (D-Ga.) have asked acting Federal Trade Commission Chair Andrew Ferguson and the Justice Department's interim antitrust lead Omeed Assefi for a briefing on the competitive landscape for online sports betting marketplaces. 'The consolidation of market power by FanDuel and DraftKings created the opportunity for abuse on pricing, consumer choice, and erecting barriers to entry for new competitors,' they wrote.
— The companies did not respond to requests for comment. The FTC and DOJ did not respond to requests for comment.
At the regulators
The Age of Impoundment — The Senate confirmed Russ Vought to lead the Office of Management and Budget by a 53-47 party line vote, reports Katherine Tully-McManus.
So it goes — Acting CFTC Chair Caroline Pham has replaced a top human resources official who had been investigating allegations that Pham created a hostile work environment for staff, Declan Harty reports.
Pending — Katy O'Donnell reports that the director of the Consumer Financial Protection Bureau's enforcement division on Thursday told employees that the Trump administration-imposed pause on the agency's work does not include pending litigation.
The shrinkage has stopped (in a sense) — A judge temporarily blocked the Trump administration from moving forward with its plan to cull the federal workforce until at least next week, writes Nick Niedzwiadek. But, as Holly and Nick report, the pause has also given Trump more time to convince people to head for the exits.
— Even so, The WSJ's Liz Essley Whyte and Betsy McKay report that Trump is readying an executive order to fire thousands of Health and Human Services workers. Over at the EPA, the administration has started notifying EPA workers that they have been placed on administrative leave, per The WSJ's Scott Patterson, Shalini Ramachandran and Lindsay Ellis.
Jobs report
Seth Frotman, who was general counsel to Consumer Financial Protection Bureau Director Rohit Chopra for the past few years, is leaving the agency today. Frotman led the bureau's legal strategy, including the fight over funding where the CFPB prevailed at the Supreme Court.
Former Department of Commerce Under Secretary for Economic Affairs Jed Kolko has joined the JPMorganChase Institute as a senior adviser.
David Gillers will step down today as chief of staff to CFTC Commissioner Rostin Behnam, the agency announced. 'He's directed the most sensitive policy and legal conversations, while still delivering on our priorities,' Behnam said. 'I wish him well as he turns to new opportunities in his career.'
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