U.S. population growth has hit its slowest pace since the pandemic, with Census Bureau data showing just 0.5% expansion to 341.8 million residents in the year through June 2025. Morgan Stanley analysts warn this trend could drag annual economic output growth below 2% unless productivity accelerates, citing reduced immigration as the primary driver.

Political shifts under the Trump administration have intensified immigration restrictions, contributing to the slowdown. The analysts note these policies coincide with recent protests over border enforcement tactics, including fatal shootings by U.S. agents in Minnesota. While the full economic impact remains uncertain, fewer migrants typically mean fewer available workers to sustain output levels.

A 4.9% surge in worker productivity during Q3 2025 offered temporary relief, potentially fueled by AI investments and post-pandemic efficiency gains. However, Morgan Stanley stops short of declaring an AI-driven boom, attributing improvements to cyclical factors like reduced labor hoarding and automation pressures.

Quick Fact: U.S. population grew by just 1.8 million migrants in the year through June 2025.