Guggenheim's Minerd Says Immigration Needed to Avert Recession

(Bloomberg) -- The U.S. needs a steady flow of immigrants to maintain economic growth, according to Scott Minerd, chief investment officer of Guggenheim Partners.

“If the United States is to succeed in the 21st century and retain its global hegemony, then rational immigration and deportation policies are critical elements to its success,” Minerd said in an email. “This would require a pragmatic resolution on the status of undocumented workers and Dreamers along with appropriate policies and controls around future immigration.”

Other money managers, such as Bill Gross, have warned that the aging U.S. population will lead to long-term slower growth. President Donald Trump has pushed for stricter limits on immigration, including building a wall on the Mexican border. Congress hasn’t passed immigration reform this year and challenges to Trump’s decision to end the Deferred Action for Childhood Arrivals, which allows so-called Dreamers to remain legally in the U.S., are working their way through courts.

Minerd has said a recession is possible as soon as late 2019 as rising interest rates hit highly leveraged corporations with increased debt burdens.

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Minerd also said in the email:

  • Policy that dynamically adjusts the pool of working immigrants could raise annual U.S. economic growth by “one percentage point or more.”
  • Without immigrant labor, the U.S. working-age population will continue to decline as baby boomers retire.
  • Recent tax reform incentives to repatriate corporate cash, increase capital expenditures and enhance productivity will provide an economic boost.

Minerd’s Guggenheim Investments in Santa Monica, California, oversaw $246 billion as of March 31, including exchange-traded funds that were sold this month to Invesco Ltd.

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