The most closely watched U.S. economic indicators have turned upside down as President Donald Trump’s immigration crackdown sends the labor force into reverse.

According to a report from Dallas Fed economists on Tuesday, the breakeven rate of employment growth, or the number of net new jobs needed each month to keep the unemployment rate steady, actually went negative during the summer and fall of last year.

That means the economy can shed jobs without lifting the jobless rate, signaling an overall balanced labor market despite a lack of net hiring.

For years, monthly job gains of around 125,000-150,000 were considered necessary to absorb new entrants into the workforce. But with the collapse of net immigration into the U.S., the size of the labor force has stagnated.

Meanwhile, Trump’s trade war last year and war on Iran this year have created economic uncertainty that’s fueling a low-hire, low-fire job market. But a negative breakeven rate could make a no-hire, low-fire market sustainable.

Drawing on data in immigration court records and revised estimates of self-deportations, the Dallas Fed economists calculated that net unauthorized immigration was negative in the second half of 2025, averaging -55,000 per month.

As a result, total net unauthorized immigration for 2025 reached -548,000, about 50% more than the Congressional Budget Office’s latest projection of -365,000.

“Incorporating these updated estimates of net unauthorized immigration into our full model—allowing the labor force participation rate to vary over time—yields substantially lower break-even employment growth than previously estimated,” they wrote. “The breakeven rate peaked at about 250,000 jobs per month in 2023, fell to roughly 10,000 by July 2025, and declined to near zero thereafter, averaging about –3,000 jobs per month from August to December 2025, indicating, if anything, a modest net jobs loss over this period.”

Coinciding with the immigration crackdown, labor force participation has also been in a gradual decline. And Friday’s jobs report showed another drop in participation, helping the unemployment rate dip. The declines were concentrated among men in their 20s and 30s, women between ages 20 and 24, and men over 55.

While the Dallas Fed economists noted it’s difficult to single out factors for the decline, other research has shown that immigrant worker flows boosted employment one for one in recent years.

The report’s findings carry major implications for the Federal Reserve, which is charged with pursuing maximum employment and price stability.

Fed Chairman Jerome Powell has pointed to the unemployment rate as a key gauge of the labor market. Despite last year’s dive in average monthly payroll gains, the jobless rate has barely moved and remains at historically low levels, leading the Fed to proceed cautiously with interest rate cuts.

In fact, the 4.3% unemployment rate in March was little changed from the 4.2% rate in February 2025, Trump’s first full month back in the White House.

“Real-time data point to an important change in the U.S. labor market: The benchmark for evaluating payroll growth has moved significantly,” the Dallas Fed economists said. “As net outflows of unauthorized immigrants reduced employment growth in late 2025, payroll gains that might historically have signaled economic slack are now consistent with a balanced labor market.”

This story was originally featured on Fortune.com