President-elect Donald Trump has promised to expel millions of undocumented people as part of the biggest deportation program in American history. But Wall Street doesn’t believe the looming immigration crackdown will live up to Trump’s campaign trail hype.
Although investors expect immigration will slow significantly during Trump’s second administration, just 6% of investors expect net immigration (the difference between the number of people entering and those leaving a region) will turn negative under Trump, according to a Goldman Sachs survey released Sunday.
In other words, Wall Street is betting that, even with Trump’s promised crackdown, more people will enter the United States than are deported from it. That would come as a relief to the business owners who warn that wide-scale deportations of millions of people, as Trump has repeatedly promised to enact, will starve them of workers and lift prices on consumers.
The findings underscore the reality that deportations will likely be slowed by legal obstacles and logistical constraints, not to mention the economic risk of causing worker shortages at farms, construction sites and elsewhere.
Nearly half of the investors anticipate annual immigration will average between 500,000 and 1 million under Trump, according to Goldman Sachs. That would be down from the recent annualized rate of about 1.75 million and the peak of 3 million last year.
The Wall Street bank found that more than 20% of investors expect immigration under Trump will be above the pre-pandemic pace of 1 million per year.
“Our forecast is only moderately below the pre-pandemic trend because there are legal and logistical limits to executive action,” Goldman Sachs economists led by Jan Hatzius wrote in the report.
The president has some authority to control immigration by executive action, but those orders lack the scope and permanence of legislation. Although the House of Representatives and Senate will be under Republican control next year, the party’s margins will be narrow, which could make legislating – particularly on a hot-button topic like immigration – potentially difficult.
Skepticism about Musk
There’s also significant skepticism among investors about Elon Musk’s promise to severely slash government spending. Trump tapped the tech billionaire to help lead the new Department of Government Efficiency, or DOGE, a nongovernmental entity charged with dismantling bureaucracy and cutting wasteful spending.
Just about 10% of investors expect the Musk-led commission will be able to reduce government spending by more than $400 billion a year, Goldman Sachs found. Nearly 10% expect DOGE will cut spending by $200 billion to $400 billion.
Yet even those figures would pale in comparison with Musk’s lofty goals.
In October, Musk was asked by Trump transition team co-chair Howard Lutnick at a rally how much he could cut out of the federal government’s $6.5 trillion budget.
“Well, I think we could do at least $2 trillion,” Musk replied at the campaign rally, held at Madison Square Garden in New York City. “Your money is being wasted, and the Department of Government Efficiency is going to fix that.”
Yet a plurality of investors – 42% – expect insignificant or very modest spending cuts, according to Goldman Sachs.
Experts have said it will be very challenging to get to Musk’s spending cut goal without touching entitlement programs like Social Security, cutting defense spending or eating into interest payments.
Former Treasury Secretary Larry Summers said last month that Musk would be lucky to even find $200 billion in budget cuts because the scope for curbing waste is limited.
“It’s just mathematically impossible to find $2 trillion,” Glenn Hubbard, a former economic adviser to George W. Bush and former dean of Columbia University’s Business School, said during the same Economic Club of New York event.
Of course, it’s almost never been smart to bet against Musk, the world’s richest person. And some business leaders are excited by his ambitious goals.
“Elon Musk, the Edison of our era, could revolutionize government through DOGE,” Salesforce CEO Marc Benioff said in a recent X post. “Imagine $2T in savings, a leaner, smarter system & a future-ready nation.”
Tariff fear
Investors are also imagining higher tariffs, and the potential side effects from Trump’s promised trade agenda.
Tariffs have emerged as the No. 1 fear among investors, according to the Goldman Sachs survey.
Asked what 2025 policy concerns them the most, 60% picked the impact of larger tariffs on inflation, economic growth and stocks. The next-closest risk, at 20%, was the risk that tax and spending measures will provoke fiscal sustainability concerns and the inflation consequences of deportations.
Even if investors are wary of tariffs, they are not exactly panicking. On the first day of trading after Trump’s new threats of massive tariffs on China, Russia and other BRICS nations, both the S&P 500 and Nasdaq were on track to finish at record highs on Monday.
