President-elect Donald Trump has pledged to expel millions of undocumented individuals in what is anticipated to be the largest deportation program in American history. However, Wall Street analysts are skeptical that the immigration crackdown will match the intensity of Trump's campaign rhetoric.
Investors foresee a significant slowdown in immigration during Trump's second term, with only 6% predicting a negative net immigration under his administration. This suggests that more people are expected to enter the United States than those being deported, providing relief to businesses concerned about potential labor shortages and increased consumer prices due to mass deportations.
Legal obstacles, logistical challenges, and economic risks, such as worker shortages in key industries like agriculture and construction, are likely to impede the pace of deportations.
Investment banking data reveals that nearly half of investors expect annual immigration levels under Trump to range between 500,000 and 1 million, a decline from recent rates. However, over 20% of investors anticipate immigration figures exceeding the pre-pandemic average of 1 million per year.
While Trump has the authority to influence immigration through executive actions, the limitations of such orders compared to legislative measures may hinder significant policy changes. The narrow Republican margins in Congress could also pose challenges to passing immigration-related legislation.
Regarding Elon Musk's role in spearheading government efficiency efforts, investors express skepticism about the potential for substantial spending cuts. Despite Musk's ambitious target of slashing $2 trillion from the federal budget, most investors expect more modest reductions, with 42% foreseeing minimal impact.
Experts caution that achieving Musk's proposed spending cuts without affecting major programs like Social Security or defense spending would be extremely challenging. Former Treasury Secretary Larry Summers and other economic analysts have cast doubt on Musk's $2 trillion goal, citing mathematical constraints and limited opportunities for waste reduction.
While some business leaders view Musk's initiatives positively, investors are primarily concerned about the impact of increased tariffs as part of Trump's trade agenda. Tariffs rank as the top worry among investors, with 60% highlighting concerns about their effects on inflation, economic growth, and stock markets.
Despite apprehensions over tariffs, market reactions to Trump's tariff threats against various nations have been relatively calm, with the S&P 500 and Nasdaq reaching record highs in trading following the announcements.
