Local Economies under Pressure as ICE Crackdowns Create Climate of Fear

Yomiuri Shimbun

7 hours ago

Lupe Lopez's Latino market in Newark, California, has been a shopping and social hub for decades – until recently.
Now the aisles are often quiet, the parking lot near empty, she said. Neighboring businesses are no different, she added: Restaurants, party and clothing stores, and even the big-box retailers seem to be emptier since the Trump administration ramped up its mass deportation campaign, raiding businesses across industries and targeting day workers in retail parking lots.
'The fear is felt in every aspect – no one is doing a party, no one is going anywhere,' the 68-year-old said of her customers. 'The shelves are just untouched.'
From California grocery stores to chicken chains in suburban D.C., businesses that serve large immigrant populations are reporting shifts in consumer behavior – fewer in-store visits, lower receipts and more delivery orders – that threaten to drag down local economies, according to interviews with business owners, as well as spending data.
As part of the promised crackdown on illegal immigration that helped propel President Donald Trump to victory in 2024, the White House is pushing to expel at least 1 million undocumented immigrants in the first year. As such, federal immigration authorities have increasingly raided workplaces across the country – triggering protests in Los Angeles, San Francisco, Chicago, Atlanta and other cities – and conducting about 2,000 arrests a day, Trump border czar Tom Homan told The Washington Post last week.
Lopez says deportation fears are affecting who comes into her stores, noting that some of her undocumented customers are sending their U.S.-born children to pick up groceries. Even those here legally are afraid to be out during the day, she added, and many people carry their passport with them in case they are stopped.
'If this doesn't stop, I feel it's going to break our economy.'
In-store traffic down, deliveries up
Communities with significant foreign-born Latino populations have been particularly affected by the immigration raids, according to business owners and Hispanic business groups across the country, as Immigration and Customs Enforcement agents have descended on Home Depot parking lots, car washes and restaurants.
Hispanic consumers are cutting back on grocery shopping: Food and beverage sales slid 4.3 percentage points in the first quarter, compared with the same three months in 2024, according to spending data from Kantar, a marketing data and analytics company. The same goes for discretionary categories, such as apparel, which slumped 8.3 percentage points during that same time period.
Among non-Hispanics, by contrast, food and beverage spending dipped 0.1 percentage point during the same period, while discretionary categories like apparel and home goods climbed 0.9 and 1.9 percentage points, respectively.
Such shifts can have implications for the broader economy, given that immigrants across the board accounted for 18 percent of total U.S. economic output in 2023, or $2.1 trillion in 2024 dollars, according to the left-leaning Economic Policy Institute.
The White House did not respond to a request for comment.
Some business groups describe a climate of fear in which undocumented immigrants – and even family members who are here legally – are not showing up for work.
'That is not to say that anyone is for open borders. It is not say that all of the workforce concerns are because they're employing unauthorized' workers, according to Monica Villalobos, president of the Arizona Hispanic Chamber of Commerce in Phoenix, where 42 percent of the population is Latino and 1 in 5 is foreign-born. 'But when you threaten one member of a multi-status household, you threaten the entire family.'
But Mark Krikorian, executive director of the Center for Immigration Studies, a think tank that supports fewer immigrants and increased enforcement, including the use of ICE raids, says that any disruption such tactics may have on regional economies should be seen as the cost of upholding immigration law.
'Any transition like that is going to have dislocations,' he said. 'Some people are going to be inconvenienced if we have allowed illegality to spread with impunity for years.'
Trump's approach to immigration enforcement will probably have greater impacts on local economies than that of the Obama administration, which notably oversaw a vast number of deportations, according to immigrant experts.
President Barack Obama, whom immigrants rights advocates labeled the 'deporter in chief,' recorded 5.3 million removals during his two terms. There were subtle effects on the economy because immigration arrests also occurred at worksites during those years, said David Leblang, a professor of politics and public policy at the University of Virginia. The difference is that enforcement focused on people with felony convictions, he said, while the current campaign is targeting anyone without legal status.
'During the Obama administration – and even during the first Trump administration – you didn't have migrants not showing up at work sites, whether they're legal or illegal, because they were worried that ICE was going to show up and basically grab everybody, pull them off the streets and send them either to jail or put them on a plane and send them to … another country,' Leblang said.
Now, the 'fear is by design.'
Trump's deportation campaign is playing out in urban centers across the nation's interior: ICE has been conducting raids at hotels and restaurants, farms and packing houses, car washes and retailers' parking lots.
'There will be no safe spaces for industries who harbor violent criminals or purposely try to undermine ICE's efforts,' Tricia McLaughlin, an assistant secretary for the DHS, said last week. 'Worksite enforcement remains a cornerstone of our efforts to safeguard public safety, national security and economic stability.'
Though Krikorian acknowledged some businesses will go under in this climate, he contends that the short-term economic pain will ultimately benefit low-skilled native workers. He pointed to studies showing that they tend to lose out on work as they compete for jobs with undocumented immigrants.
Slowing business is already being reflected in shopping data and public statements from retail chains and consumer goods companies.
JD Sports CEO Régis Andre Schultz referenced this last month during a call with analysts. He noted that the sports-fashion retail company's Shoe Palace banner – which 'is targeting the Hispanic customer' – has seen 'a huge decline in traffic, which I think is telling. I think the online business has been okay. But you can definitively see the impact from the immigration policy on Shoe Palace.'
Burlington, the clothing retailer, and beverage giant Keurig Dr Pepper, made similar observations during recent earnings calls. Keurig Dr Pepper CEO Timothy Cofer, noting in April that Hispanic consumers represent a 'meaningful percentage of our business,' said recent sales data revealed 'softening trends among Hispanic consumers relative to the broader population.' They're making fewer shopping trips, he added, and spending less when they do.
Lopez fully expected to see some belt-tightening at Arteaga's Food Center, which counts eight stores from San Jose to Lodi, California – once tariffs pushed up prices. But she hadn't anticipated the ICE raids. Now, customers are hunkering down, trying to save by forgoing fresh produce and meat for cheaper shelf-stable options like boxed macaroni and cheese and canned soup. Many are afraid they might be deported, she said, and even if they're not, they're afraid of losing their jobs or small businesses if the economy goes south.
Misinformation and heightened anxiety are also concerns. Lopez said her social media and messaging apps are being flooded with warnings about ICE raids. She tries to verify the claims before reposting on social media and responding to texts, in hopes of clearing up any misinformation before it affects local businesses. Most of the time they're false alarms, she said.
'You're afraid of your business being mentioned, you're afraid of your name being mentioned, you're afraid of someone coming in and targeting you,' she said. 'But at some point you just decide: I am going to not continue being afraid. I am angry and I am focusing that energy on something that perhaps can do some good.'
For much of her adult life, Lopez, who emigrated from Mexico as a teenager, said she was living the American Dream. Now, she says, that dream is dying.
'It's not even about business anymore – it's not about keeping my doors open,' she said, tearing up. 'It is about keeping my community safe.'
Empty booths, fewer money transfers
On a recent weekday around dinnertime at a Pollo Campero restaurant in Wheaton, Maryland, the booths were empty save for the family of six seated at a corner table. Everyone else was doing take-out.
The dining room has been that way for weeks, said manager Beatriz Ajucum, ever since the immigration crackdown. But it's not that business is slow; it has actually picked up, she said, only now 'all the orders are to-go or delivery.'
Up and down Georgia Avenue in Wheaton, where Hispanic comprise nearly half the population – and 43 percent of residents were born outside of the United States – workers at shops and restaurants noted that foot traffic is unusually slow for June.
'Everyone's afraid of ICE,' according to a server at a Salvadoran restaurant just off the main corridor, who spoke on the condition of anonymity for fear of reprisal. 'We're worried about not getting customers.'
Slow foot traffic appears to be a nationwide trend. Mary Brett Whitfield, the senior vice president for shopper insights at Kantar, said data shows that a greater number of Hispanic shoppers were already avoiding physical stores in the first quarter. In-store shopping dropped 9 percentage points compared with the previous quarter, according to Kantar. Instead, they're opting for delivery and pickup – which climbed from 51 percent in the fourth quarter of 2024 to 58 percent in the first quarter of this year. Among non-Hispanic shoppers, online spending was flat, at 49 percent, during the same period.
Even businesses not directly targeted by ICE are feeling the effects.
Two financial services companies that handle remittances ― payments that migrant workers send to friends and family abroad ― report that their customers are making fewer visits and sending more money with each transfer. Western Union and its competitors allow U.S.-based consumers to send money from designated storefronts using cash, sidestepping the need for a bank account.
'People are just more reticent to be out in public, sending money,' Western Union chief executive Devin McGranahan said in a May 29 call with investors.
Consumers are 'sending larger amounts of money less often due to certain factors about which we can only speculate at this time,' Robert Lisy, chief executive of International Money Express, said in a May 9 call with analysts.
The crackdown is also triggering convulsions through the construction industry. When Trump returned to office in January, George Carrillo, co-founder and chief executive officer of the Hispanic Construction Council, warned the trade group's tens of thousands of members about the risk his policies presented to their workforces.
At the time, most were convinced 'he's going to go after criminals,' Carrillo said, and were optimistic about some of his goals, including 'opportunity zones' and 'cutting a lot of the red tape.'
But in the wake of multiple workplace raids – including one in May at a Tallahassee construction site where more than 100 workers were taken into custody – 'it's hitting people differently now,' Carrillo said.
Aggressive enforcement has created chaos and a 'domino effect' he said, one that touches major developers in housing and critical infrastructure, and funnels down to local plumbers, electricians and day laborers. His group's members are reporting that fewer workers are showing up to jobsites, forcing firms to overhaul operations or else risk missing deadlines.
'For many of these business owners now, they're saying, 'I'm having to take a different approach to this,' Carrillo said. And for millions of undocumented workers across the U.S., 'there's a lot of very difficult conversations that are happening at the dinner table right now.'