The federal government’s aggressive Immigration and Customs Enforcement (ICE) campaign cost American cities up to $14 billion in lost consumer spending last year, according to research by Wharton management professor Exequiel (Zeke) Hernandez. And the chilling effect on local economies lasted long after the masked agents had left.
His analysis reveals how areas that were targeted by the immigration crackdowns experienced sharp declines on both the supply and demand side, with fewer workers showing up to work and fewer shoppers coming in to patronize local businesses. These effects have not reversed over time and are indiscriminate, Hernandez said, explaining that they are happening whether or not the targeted neighborhoods have a large number of immigrant or Hispanic residents.
“The fear doesn’t go away when the ICE raid ends. People are constantly on alert. They’re afraid to go out,” he said. “ICE is not just hurting the economy for a few days or weeks. They are hurting the economy nonstop.”
His latest paper, “ICE-ing the Economy: Immigration Enforcement Under Trump 2.0 and Local Economic Activity,” has been highlighted by Forbes, Brookings, NPR, MS Now, and other outlets because it offers a different perspective on the raids. While the legality and lethality of ICE tactics have dominated the headlines, there’s been less commentary about its economic effects.
“There was a lot of attention on whether this was good enforcement policy or not, but as a business professor and an economist, it struck me that nobody was talking about what happens when hundreds of soldiers show up in a community and create fear. I thought I’d get the data and see what it said,” Hernandez said.
“ICE is not just hurting the economy for a few days or weeks. They are hurting the economy nonstop.”— Exequiel (Zeke) Hernandez
An ICE Data Set Like No Other
The professor built a novel data set of 5,388 ICE raids geocoded to their exact locations, foot traffic for 5.4 million commercial points of interest based on cell phone mobility records, and credit and bank card transactions for 1.1 million points of interest between January 2024 and February 2026. The combined data allowed him to estimate the effect of enforcement on foot traffic at workplaces and retailers, and on spending at retailers. He compared those areas over time to places not targeted by raids.
Hernandez also analyzed more than 46,000 news articles to study how the language shifted as ICE raids intensified. He examined specific language across six categories: fear and hiding, work absenteeism, school absenteeism, reduced commerce, reduced foot traffic, and business closure. For example, a news story out of Charlotte, North Carolina, stated, “Weeks later, the sidewalks of Central Avenue are still uncharacteristically quiet.”
This added layer of qualitative data helped validate the quantitative results. They include:
- A 2.73% decline in foot traffic and a 6.18% decline in spending per point of interest per week.
- A 2.9% drop in foot traffic and a 6.9% drop in spending, compared with 2024.
- Shoppers did not move to online or delivery channels. The effects happened regardless of neighborhood demographics and did not dissipate over time.
- The declines are equivalent to 8.1 billion fewer visits and between $3 and $14 billion in lost spending during the first year of Trump’s second administration.
Hernandez said he was expecting to find a decline in economic activity because Trump’s immigration crackdown has been uniquely aggressive. But he was surprised at the depth and breadth of the losses.
“Every type of business and consumer feels it — Hispanic, non-Hispanic, businesses big and small. Nobody is immune from the punch, which is another way in which this is completely unprecedented,” he said.
Hernandez’s paper, believed to be first of its kind, also supports the findings of state and local governments that did their own calculations after being raided by ICE. Minneapolis reported $700 million in economic losses from Operation Metro Surge, which also resulted in the highly publicized shooting deaths of citizens Renee Good and Alex Pretti. Los Angeles County lost more than $3 million over a two-week period of raids, and Chicago’s commercial district of Little Village reported yearly revenue declines of 50%.
“Nobody is immune from the punch.”— Exequiel (Zeke) Hernandez
The Message for Policymakers
Hernandez said his research is neither partisan nor an argument for zero immigration enforcement. Rather, he called on political leaders to use the study results to create less harmful policies.
“We can have lots of arguments about the proper role of immigration enforcement, but I think we can all agree that permanently decimating the livelihoods of workers and businesses and citizens is not it,” he said. “Many who seem to be in favor of this approach justify it by saying that it will help American businesses be better off and create more jobs. What I’m finding is its doing exactly the opposite.”
He also hopes other scholars will broaden their scope when studying immigration and the economy, which often focuses solely on the labor market while ignoring supply and demand.
“We can’t forget that the economy isn’t just jobs and wages. It’s also consumer spending, and businesses staying open, and both native and other workers showing up to work,” he said. “We can’t just document one economic effect. We have to get the bigger picture.”
