The investment bank’s U.S. economics team, in a report led by David Mericle, projected a precipitous drop in the arrival of new workers. While net immigration averaged approximately 1 million people per year during the 2010s, that figure fell to 500,000 in 2025 and is projected to plummet further to just 200,000 in 2026, Goldman said. That represents an 80% decline from the historical baseline, a shift the report attributes directly to aggressive policy changes, including “elevated deportations,” a recently announced pause on immigrant visa processing for 75 countries, and an expanded travel ban.

The economists note these measures are likely to “slow inflows of visa and green card recipients” significantly, while the “loss of Temporary Protected Status for immigrants from some countries” poses further downside risks to the labor supply. The report explicitly links the forecasted drop to elevated deportations and tighter visa and green card policies.

Redefining the ‘break-even’ number

This severe restriction of the labor pipeline is forcing economists to recalibrate their benchmarks for the U.S. economy. Because fewer immigrants means fewer new workers are entering the labor force, the economy requires fewer new jobs to keep the unemployment rate stable. Goldman Sachs estimates this “break-even rate” of job growth will fall from its current level of 70,000 jobs per month to just 50,000 by the end of 2026.

“Labor supply growth has declined sharply as immigration has fallen from the peak reached in late 2023,” Mericle’s team wrote. Consequently, a monthly jobs report that might have looked weak in previous years could now signal stability. “A small pickup is all that should be needed to sustain job growth at the break-even pace,” the analysts wrote, suggesting the lower supply of workers is masking what might otherwise be seen as sluggish hiring demand.

These missing workers have prompted considerable debate—even anxiety—in economic ranks, as reduced immigration has been yet more noise in the economic data, along with the “shrinking ice cube” of Trump’s tariff regime and the boom-or-bubble debate over artificial intelligence.

The increasing productivity from fewer workers leads some, such as Stanford’s influential Erik Brynjolfsson, to see a liftoff happening from AI tools, while others see a hinge moment in which Big Business is preparing to do to white-collar workers in the 2020s what it did to blue-collar workers in the 1990s and massively downsize. This research from Goldman suggests the economy is learning how to make do without the crucial layer of immigrant labor that fueled the last regime. Indeed, Mericle’s report was titled, “Early steps toward labor market stabilization.”

Other economists have recently projected the economy is nearing a break-even point while creating fewer jobs, notably Michael Pearce of Oxford Economics. Last August, J.P. Morgan Asset Management strategist David Kelly predicted there could very possibly be “no growth in workers at all” over the next five years owing to the change in immigration to the U.S. and the aging of the native-born workforce.

Shadow workforce and economic risks

The crackdown may also be pushing the labor market into the shadows, Mericle found. The report suggests that “stricter immigration enforcement pushes more immigrant workers to shift to jobs that fall outside of the official statistics,” potentially skewing federal data. This shift complicates the Federal Reserve’s ability to gauge the true health of the economy, as official payroll numbers may fail to capture the full picture of employment activity.

It would certainly explain why the headline unemployment rate appears to be stabilizing around 4.3% (it recently dipped to 4.28%), although Goldman said the labor market remains “shaky” because of these unpredictable factors. The report highlights a “notable drop in tech employment,” although it clarifies the sector accounts for a relatively small share of overall payrolls. More concerning is the “continued decline in job openings,” which have fallen below pre-pandemic levels to roughly 7 million.

In a separate note, Goldman chief economist Jan Hatzius maintained a “moderate” recession probability of 20% for the next 12 months. The firm expected the labor market to stabilize, predicting the unemployment rate will rise only slightly to 4.5%. However, they warned, risks are “tilted toward a worse outcome,” largely owing to the weak starting point for labor demand and the potential for “faster and more disruptive deployment of artificial intelligence.”