In January, federal immigration agents killed Renée Good and Alex Pretti – both US citizens – in Minneapolis, during Operation Metro Surge. The deaths sparked protests across the country and the Administration ended the operation within weeks. They focused on the human cost of the recent escalation in immigration enforcement. What had not yet been measured is the cost to local economies where this surveillance has been most intense.
ICE arrests – Immigration and Customs Enforcement (Immigration and Customs Enforcement)– had remained stable until the end of 2024, with an average of 8,000 to 9,000 monthly across the country. In a few weeks they doubled: from 7,955 in December 2024 to 16,947 in February 2025, and reached 32,667 in October 2025. But more decisive than the level is the composition: arrests in the community multiplied by 5.7, while those made within prisons only by 1.3. Thus, the weight of community arrests on the total went from 29% to 63%.
With anonymized credit card spending data (Affinity Solutions, via Opportunity Insights), we found that consumption fell 1.7 percentage points in states where community surveillance grew the most. To put it in context: it is approximately 7% of the total card spending drop observed at the peak of the covid-19 pandemic.
Why is consumption falling? There are two reasons. The first is visibility. When someone is arrested on the street, at work, or in court, the neighborhood finds out and is afraid to leave home, so they spend less. The second reason is simpler: when someone is deported, they stop working and bringing home a salary. And it's not just immigrants: when there are fewer people in the neighborhood spending money, businesses that depend on this local clientele –restaurants, hairdressers, shops– also see less business, and this ends up taking jobs away from American workers who worked there. With fewer people working, less money enters households, and therefore less is spent.
It is not easy to know if the drop in consumption is really caused by raids, or if both things just coincide: ICE could be acting precisely in areas with more undocumented immigrants, or where unemployment was already higher, places where consumption would have fallen equally, with or without raids. But the intensity of the raids has not been the same in all states nor has it been concentrated where there was a greater prior history of arrests. This geographic variation – a national shock with very unequal local intensities – allows us to treat it as a natural experiment that we use to analyze its economic consequences.
To ensure that what we detect is the effect of visibility, and not something else, we perform two checks. First: if the effect came from the level of arrests and not from the fact that they are seen, those made inside prisons – which have also increased, but are invisible to the neighborhood – should also reduce consumption. They do not: their effect is practically zero. Second: if we were to capture a generic economic slowdown in the state, coinciding by chance with increased surveillance, spending that does not require leaving home should also fall. It does not fall either. Both tests point to the same place: the visibility of arrests cuts consumption.
While in the United States the strategy is to intensify visible surveillance, Spain has just taken the opposite direction. In April 2026, the government approved an extraordinary regularization process for irregular migrant persons who have been living in the country since before January 1, 2026, with applications open until June 30. Minister Elma Saiz has presented it as a way to guarantee rights and legal certainty to a group that is already part of society.
If our research says anything about Spain, it is that the path is the opposite of raids: fear makes people withdraw from economic life, and regularizing them removes that fear from the equation; at the same time, while deportations remove workers from the formal economy, regularization incorporates into it – with contracts and rights – those who were already working in the black market. If fear and informality cut consumption and production, removing them should reactivate them.
Immigration policy is not just a matter of security or law: it is also economic policy, with effects that the entire society ends up feeling.
