Episode summary
Why This Economist Says Immigration Crackdown is Reshaping U.S. Job Growth | WSJ’s Take On the Week
The Journal
· · Hosts: Telis Demos, Miriam Gottfried · Guests: Wendy Edelberg
Summary
Airline earnings are the first market story this week, with Alaska, Southwest, United and American all reporting against a surge in jet fuel costs. The hosts argue that oil is only part of the pressure: airlines are raising baggage fees, cutting capacity, and may keep the higher fees even after fuel cools, which could eventually lift profitability. They also note that Delta’s refinery bet may be helping it absorb the shock better than peers.
On consumer stocks, the discussion turns to luxury names such as Kering, Hermes and LVMH. The hosts argue that the pullback in luxury is less about gasoline and more about weaker spending in the Middle East, where wealthy shoppers have been less active, even as the S&P 500 has moved above 7,000 and wealth effects remain supportive.
The central interview is with Wendy Edelberg, who says immigration policy has become the key variable distorting U.S. labor data. She argues that the economy may now need roughly zero monthly job growth just to stay stable, because abrupt immigration declines mean labor force growth has largely stopped. Edelberg says that makes the unemployment rate more useful than payroll growth, complicates the Fed’s rate-cut calculus, and could leave lasting damage to productivity and fiscal policy.
Key takeaways
- Wendy Edelberg says the U.S. may now need roughly zero monthly job growth to be consistent with a healthy labor market because labor force growth has slowed sharply.
- Edelberg argues the unemployment rate is a better guide than payroll growth now because immigration changes make current employment data hard to compare with 2024.
- The hosts say airlines are leaning on higher baggage fees and capacity cuts to offset surging jet fuel costs, and those fees may outlast the fuel shock.
- The hosts think luxury stocks are being driven more by wealth effects and Middle East demand than by oil prices.
- Edelberg warns that tighter immigration policy could permanently reduce productivity growth and worsen federal fiscal pressures.
Notable quotes
“Fast forward to 2025, you have this incredibly abrupt uh reduction in immigration”
“we really don't have much labor force growth anymore”
“our estimates are that here now in 2026 that break even employment growth number might be roughly around zero”
“I think we are clearly now in a place where employment growth is keeping up with labor force growth”
How the episode opens
Fast forward to 2025, you have this incredibly abrupt uh reduction in immigration. And what this means is that we really don't have much labor force growth anymore. — Hi, Miriam. — Hi, Telus.
Well, we've got a big conversation today about immigration and the economy. Uh it's something that obviously is at the forefront of people's minds politically about the Trump era and we've addressed it here and there in our conversations about the job market, but we haven't really just head on looked at data and talked about how we should factor this into our economic forecasting. So we're going to do that a little bit later in the show.
But first, of course, we want to check in on what's going on in the markets. And the thing that has obsessed everyone now for a while is the price of oil and related things. And we're getting a new lens on how that is filtering through our economy through airline earnings reports this upcoming week.
We've got Alaska, Southwest, United, and American. And of course, recently Delta reported. So, Miriam, what did we learn from from past reports?
And and what are you looking for in these upcoming reports?
Well, I think what's really interesting is that there's not a onetoone correlation with oil prices. Oil prices are an input into jet fuel, but actually as our colleague Allison Cider wrote, jet fuel prices more than doubled in the weeks after the start of
Way more than just the price of oil. — Way more than just the price of oil. So this is really a huge factor for these airlines. And Allison actually wrote another interesting story about Delta, which is u Delta years ago bought a refinery, which many people thought was kind of a dumb idea.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- immigration crackdown
- us job growth volatility
- airline fuel costs
- luxury consumer slowdown
- fed interest rate outlook
Companies and tickers mentioned
- ALK
- LUV
- UAL
- AAL
- LVMUY
- PPRUY
- Alaska Air Group
- Southwest Airlines
- United Airlines Holdings
- American Airlines Group
- LVMH
- Kering
- Brookings Institution
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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