The U.S. population grew by only 1.4 million people, or 0.4%, for all of last year, according to data released by the Census Bureau on Tuesday. Not counting 2021, when the global Covid-19 pandemic slashed growth to 0.2%, that is the slowest rate of population growth the U.S. has ever experienced going back to 1900.
These worsening demographics weigh on a nation’s capacity to grow and generally lead to more inflationary pressures. Both are important to consider when looking at the current state of the U.S. economy, says Gregory Daco, chief economist at EY-Parthenon.
“This is the most underappreciated force that is shaping the global outlook and the U.S. outlook, in the sense that we are seeing a steady move, a steady evolution, of demographics that is going to weigh against our potential to grow,” Daco says.
The slowdown in population growth is largely due to a historic decline in the net number of people coming to live in the U.S., Christine Hartley, assistant division chief for Estimates and Projections at the Census Bureau, said in a statement. “With births and deaths remaining relatively stable compared to the prior year, the sharp decline in net international migration is the main reason for the slower growth rate we see today.”
About 1.3 million net new immigrants became U.S. residents from July 2024 to June 2025, less than half of the 2.7 million recorded during the same period a year prior. A Congressional Budget Office estimate found that net immigration amounted to 410,000 in all of 2025.
Census projects that if current trends continue, net international migration will be just 321,000 for the full year of 2026. That would be a decline of nearly one million migrants compared with the prior year.
That means this year could be another one of stagnating population growth. The Census Bureau projects the population to grow by just over 800,000 people, or 0.2%, in 2026. The CBO, meanwhile, similarly expects the U.S. population will rise by just 0.3% this year.
But even those lowball official projections may not be low enough, writes Stephen Brown, deputy chief North America economist at Capital Economics. He points out that research from the Federal Reserve Bank of Dallas shows that net unauthorized immigration likely declined by 576,000 in 2025, with voluntary departures surging by 640,000 on an annualized basis in July.
If voluntary departures were anywhere near that level for the year, Brown contends, the total decline in the undocumented population would be more than one million. “That would be three times larger than the CBO’s projection and would result in the total population being unchanged this year or even falling slightly,” he writes.
Additionally, recent funding increases to Immigration and Customs Enforcement mean that immigration raids are more likely to ramp up in the coming months, he says. The resulting arrests and deportations will likely affect the workforce.
“To the extent that recent events in Minnesota are a sign of things to come, there could also be broader labor disruption in certain areas of the country as a result of protests or riots in the warmer months,” Brown writes.
Economic research has shown that an expanding population produces greater consumer demand, increases the supply of labor, and can generate innovation through greater population density. Developed nations with shrinking populations, however, have faced more challenges in achieving economic growth.
A long-lasting demographic hit can exacerbate inflationary pressures over time and also reduce a country’s potential economic growth, Daco says.
Slowing population growth also would affect the labor market—a shift that could appear striking because it comes after a sizable uptick in 2024. The U.S. added 3.2 million individuals that year, bringing the population growth rate to 1.0%. That was the fastest annual population growth rate since 2006, Census reported.
In the near term, the slowdown in population growth will likely keep the break-even point of job creation–or the number of new jobs the U.S. economy must create monthly to keep the unemployment rate in check—fairly low over the coming year. The break-even rate was above 125,000 jobs a month in 2023, but by the end of last year, it was estimated to be closer to 30,000.
That should help to ensure that the unemployment rate remains stable in the coming months, even though hiring has been slow. But that may be the only good news on tap when it comes to slower population growth.
U.S. immigration has been the main factor supporting growth in the number of people of working age. The CBO projects that by 2030, there will be more deaths than births, which will lead to the working- age population shrinking. It would reduce the economy’s potential to grow because the country’s capacity to produce would be constrained, Daco says.
Stagnating population growth actually reframes much of the fears around artificial intelligence, Daco says. Instead of worrying that generative AI will take American jobs, perhaps we should be asking when the technology can handle positions that companies may have trouble filling in the future.
“This aging of the population and the shrinking of the working age population is a real risk to the U.S. sustainably maintaining a pace of growth around 2%,” Daco says.
Write to Megan Leonhardt at megan.leonhardt@barrons.com