Labor market turns upside down as the economy can shed jobs and still keep unemployment low amid immigration reversal

The most closely watched U.S. economic indicators have turned upside down as President Donald Trump’s immigration crackdown sends the labor force into reverse.

According to a report from Dallas Fed economists on Tuesday, the breakeven rate of employment growth, or the number of net new jobs needed each month to keep the unemployment rate steady, actually went negative during the summer and fall of last year.

That means the economy can shed jobs without lifting the jobless rate, signaling an overall balanced labor market despite a lack of net hiring.

For years, monthly job gains of around 125,000-150,000 were considered necessary to absorb new entrants into the workforce. But with the collapse of net immigration into the U.S., the size of the labor force has stagnated.

Meanwhile, Trump’s trade war last year and war on Iran this year have created economic uncertainty that’s fueling a low-hire, low-fire job market. But a negative breakeven rate could make a no-hire, low-fire market sustainable.

Drawing on data in immigration court records and revised estimates of self-deportations, the Dallas Fed economists calculated that net unauthorized immigration was negative in the second half of 2025, averaging -55,000 per month.

As a result, total net unauthorized immigration ...