Sunday, May 06, 2007

 

Economic Indicator of the Day

... falling border apprehensions may be an early predictor of where the economy is headed. —Faye Bowers writing in "What's US economy's future? Ask illegal immigrants."

This conjures up a scene in the Oval Office. Karl Rove rushes in with the latest figures from the Border Patrol: "Mr. President, It looks like we have a problem. Immigrant arrests have dropped."

... Americans should prepare for rough economic times ahead, says Dawn McLaren, a research economist at Arizona State's business school.

For the past decade, Ms. McLaren has been tracking the relationship between border apprehensions and economic growth. Every time apprehensions declined, the economy slowed about 12 months later, she found. "About a year before a recession, or a down cycle, there was a slowdown in the number of arrests" on the border.

The connection is straightforward: New illegal immigrants hold some of the economy's most marginal jobs, which are some of the first to be left unfilled when a slowdown looks imminent....
....

McLaren and her colleagues now use the numbers of apprehensions as one tool in their matrix of indicators to predict where the economy is headed.

Why, you can even look at the effect by sector—

Since the end of 2005 ... apprehensions have fallen again. By April of last year, the trend was firmly established and indicated ... that the economy would slow down this year. Indeed, the Department of Commerce reported on Friday that the economy grew only 1.3 percent for the first quarter of this year, the worst performance in four years. One key reason: a slump in the housing market, which is the biggest employer for foreign-born Hispanic workers, according to the Pew Hispanic Center in Washington.

I love economics. I'm hoping to apply what I learn there to my tea-leaf reading.

Related posts
Economic Indicator of the Day (4/19/07)
Headline of the Day (4/24/07)

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