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What Could Trigger the Next US Recession: How About Trump's Plan to Deport 11+ Million "Illegal" Consumers?

The Huffington Post The Huffington Post 10/11/2015 Terry Connelly
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Maybe it's finally time to take the idea of President Donald Trump seriously. After all, it seems like America's largest retailer, Walmart, might be doing just that: a few days ago, the giant company lowered its outlook for revenues and earnings, citing a "tougher sales environment" than it expected a year ago (when, of course, Trump was not yet running for President or promising mass deportations). Could it be that the smart, experienced executives who run that company have begun to think through just what the effect on Walmart's sales would be given a post-election mass deportation of all the estimated 11-12 million undocumented immigrants (plus a goodly number -- estimates range from range estimates range from 3.7 million up to 4.5 million -- of children born here to undocumented fore whose citizenship Trump plans to revoke by court order)
Likewise, America's major hospital chains, such as Community Health Systems and LifePoint , have been lowering their expectations for admissions going forward. Perhaps that's no all due to some or other supposed effect of ObamaCare.
Certainly, there are few if any financial models or precedents for such a mass forced emigration program from the United States. The Japanese internment program in World War II involved only around 127,000 individuals -- and most of those persons were held captive within US borders, where they were fed and housed and schooled and provided medical care, while the wartime production economy was booming. The Trump deportation plan (such as it is) involves a vastly larger number of people and logistics, but with the ultimate result of eliminating the equivalent of the entire populations of New York City and Los Angeles from both the production and consumption sides of the US economy. Indeed, the right-wing radio talk show host Rush Limbaugh, who is one of the most consistently vocal backers of Trump's plan, estimates the number of illegals at 20 million (and that's just the illegal workers), so he would presumably see the total hit to the economy as including the entire population of America's five largest cities, plus the Bay Area of San Francisco.
Since candidate Trump has provided few details of his mass deportation plan as yet, we'll have to use our imagination to work out the scenario; he has said multiple times, however, that it would proceed humanely. But there are only so many ways to search out, pick up, pack up, pen up and then ship out 20 million people in time for the next election. So let's visualize: the easy part will be stripping out the undocumented felony prisoners, and they already have a place to stay until their plane is ready. But the vast majority also have families, which would argue for at least trying to round them up at the same time, as Trump has indicated he would like to allow families to stay (i.e., "leave") together.
After that, let's assume President Trump follows the usual stereotypes of his talk radio chorus. We can imagine would probably become known as "The Night of the Nanny Snatchers," doing it after dark would be more humane than picking them up as they drop off their charges at school, or via an ICE sweep through the kitchens of upper Park Avenue and Greenwich at dinner time -- great for high TV ratings, Donald, but not the kind you'll want. Likewise, the Federalized National Guard sweeps through the meat-packing plants in Nebraska and Iowa can be carried out first in the night shifts, and those Midwest locations are hardly major TV markets (but Trump will have to do something about the I-phone Twitter videos -- he knows all about Twitter).
Rounding up the kitchen and waiting staff of urban restaurants won't be pretty (but Trump will point out it could lead for an economic boom from the rediscovery of the automat). Nor will hitting the Catholic Church "sanctuaries", but Trump can get that done on Sundays while most people are watching football. Finally, getting those pesky "Dreamers" rooted out of their college dorms to rejoin their parents in the processing camps, as well their little brothers and sisters in grade and high schools might be a little tougher yet, especially under Trump's Second Amendment Enforcement Act, which will allow all those kids and their teacher-sympathizers to be armed to the teeth!
But once it's all done, will the US really experience the economic nirvana of spending savings and surge in job creation that Trump promises from shrinking the US population by at least 15 million? Even if as he promises "the good ones can come back", from the back of the line, of course? Let's think about it.
The housing market, which is now finally and firmly in real recovery, would be hit with a glut of millions of abandoned private homes (and, of course, related mortgage obligations -- hardly great for homeowners looking to sell for ordinary reasons, or the banks, which will take another round of hits to their balance sheets as housing prices tumble back down with the a new wave of "for sale" signs). Certainly not great for US GDP, as we have seen before, when that figure went deep in the red with the last great housing meltdown.
As to the "giant sucking sound," as Ross Perot used to say, this time coming from abandoned rental apartment, a big jump in the vacancy rate would lead to lower rents for us citizens, but the deflationary pressures this would pose for the economy would also keep the Federal Reserve from any serious effort to normalize interest rates, which ironically might now be needed to prevent a deflationary spiral toward recession. Those apartments can't all be turned into Airbnb units -- and who's going to afford vacations with the onset of another recession.
Cutting against the risk of deflation, however, would be the enormous jump in the price of agricultural commodities. Undocumented immigrants constitute slightly more than an estimated 50 percent of all agricultural workers in the US, or over 600,000, who would not readily and easily be replaced without another Civilian Conservation Corps-type of conscription program for unemployed youth. Trump would at least have to go to Congress to authorize America's first "Lettuce Draft," but an enormous jump in grocery prices while that gets approved, set up and running would have its own recessionary impact on the balance of consumer spending on goods and services.
Americas GDP is driven 70 percent by consumer spending, not to mention sales tax receipts for states that depend on those receipts in the absence of income taxes. With the collapse in housing from the bottom up due to a deportation exodus, moreover, property tax receipts in these states would also "head south" (figuratively, of course). Restaurant prices would scale up with the cost of fruits and vegetables, which would hit consumption, too, as our citizen families struggle to pay for salads and smoothies. And just think about what will happen to the new and used car markets and the millions of job we now know depend on them, with so many millions of abandoned vehicles left behind to scavengers and junk yards or at best sold quick and cheap before the owners get forced on the plane.
And just think about the collective hit from housing and retail to the US GDP growth rate, which just established a somewhat firmer but disappointing footing of around 2 percent annually, and to the recently resurgent new and used car markets.
One Trump supporter has suggested that the government could put some of the undocumented to work building Trump's wall on the Mexican border, but apparently they would be paid in pesos, which won't do much for currency liquidity in the US. But Trump's experiment with forced labor camps, mass roundups without trial, temporary concentration camps and mass deportation by bus, plane and ship -- irrespective of its moral cost -- is surely likely to have a dramatic downward effect on America's economic growth. Unlike the housing crisis, which first bloomed out of sight in the stealthy canyons of Wall Street, this economic debacle can be foreseen with clear eyes well ahead of time -- especially as Trump's mass deportation "plan" continues, in its politically calculating way, to leave things to our imagination.

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