Unprecedented Migrant Surge Challenges U.S. Southern Border

Federal authorities have reported a staggering seven-day average of over 9,600 migrant encounters along the U.S. southern border in December, marking one of the highest levels ever recorded.

Authorities encountered 242,418 illegal immigrants at the US-Mexico border in November, US Customs and Border Protection announced Friday, a new record for the month.

Amid this unprecedented surge, the U.S. grapples with overwhelmed resources and strained processes as daily border apprehensions surpass 10,000 migrants, placing a strain on border agents and leading to the uncommon step of closing certain bridges and ports.

In response, President Biden sent Secretary of State Antony Blinken and senior Homeland Security officials to Mexico for discussions on how to curb this influx. Meanwhile, House Speaker Mike Johnson (R., La.) urged the White House to take executive action to address and redirect the flow of migrants.

Administration officials have approved the establishment of a new expulsion authority, mirroring the pandemic-era Title 42 policy, which persisted for several years into President Biden's term. This new authority would eliminate the opportunity for migrants to request asylum at the southern border.

Additionally, officials have endorsed the idea of holding more migrants in immigration detention throughout their cases, marking a significant shift from the Democratic objective to reduce or eliminate the utilization of Immigration and Customs Enforcement jails.

However, the effectiveness of these measures in curbing border crossings remains uncertain. The most probable immediate deterrent would be the increased mandatory detention of asylum seekers. However, funding sufficient beds to accommodate the influx of migrants would be a costly endeavor.

Although immigration politics has historically been a contentious issue, the current challenge lies in navigating the intricacies of the situation.

"There's a good chance that they do some things that actually help control the numbers arriving at the border," Andrew Selee, the president of the Migration Policy Institute, a nonpartisan think tank, told The Wall Street Journal. However, he also acknowledged the risk of overreach, enacting laws that may not effectively address border issues but could instead contribute to increased chaos.

Breaking Point

In the fiscal year of 2023, the southern border witnessed a historic surge in encounters, surpassing any other year since the government began tracking such records in 1960. The estimated total for the year reached an unprecedented 2.4 million.

This continuous surge is consistently breaking previous records, with border agents in locations like Eagle Pass, Texas, struggling to contain the influx.

Monday alone saw a staggering 12,600 encounters at the southern border, establishing a new daily record, as reported by officials.

The lack of capacity and resources to address the escalating issue has led to concerns that the U.S. southern border is approaching a "breaking point." U.S. officials are sounding the alarm about the challenges in processing and accommodating the increasing number of migrants.

This week, President Biden engaged in a call with Mexican President Andrés Manuel López Obrador to exert pressure on Mexico to enhance efforts to curb the migrant flow. Both leaders agreed on the urgency of additional enforcement actions to reopen ports along the U.S.-Mexico border.

The call comes at a critical moment for President Biden, who has faced recurring migrant surges fueled by worsening conditions in the Western Hemisphere. Under the Biden administration, the Department of Homeland Security had anticipated and planned for surges as high as 16,000 to 18,000 arrivals per day at the U.S. southern border.

Economic Ramifications

On Friday, the federal government restored operations at two cross-border railroad crossings in Texas, ending a five-day disruption to trade that had provoked criticism from businesses in both the U.S. and Mexico.

Railroad companies and business groups, including the U.S. Chamber of Commerce, had pressed CBP to reopen the two rail bridges in Eagle Pass and El Paso, Texas, after U.S. border authorities closed them on Dec. 18 to "redirect personnel" to process migrants crossing the border.

Major railroads Union-Pacific and BNSF emphasized the economic impact and the labor issues caused by the border closures. The closures halted nearly half a billion dollars in trade, affecting Union Pacific, which handles $200 million worth of trade daily through these crossings.

While government officials argue that the closures are necessary for the safety and security of migrants, rail companies dispute the scale of the problem. Union Pacific said only five people attempted to cross into the U.S. on their trains in the last five weeks. Both railroads assert collaboration with CBP and employ security measures like X-rays to detect illicit cargo and individuals.

Texas Tightens Stance

The situation at the border has prompted a legislative response from Texas Gov. Greg Abbott, who signed a law allowing local police to arrest and deport migrants entering the state without legal authorization. The move intensifies the ongoing clash between state and federal authorities over immigration policies.

The law, set to take effect in March, adds another layer to Texas' Operation Lone Star, a border enforcement program aimed at deterring illegal crossings.

As Texas tightens its stance on immigration, the closures and subsequent economic challenges underscore the complexity of addressing both security concerns and maintaining essential trade relationships.

The debate continues in Washington, where talks on border policy changes are ongoing, influencing broader foreign aid packages.?

They Come From All Over the World

The Border Patrol catches between 5,000 and 7,000 migrants a day crossing without permission, but can only process a small portion of them, with most released into the U.S. This motivates people to try to cross illegally in hopes of getting into the country—damaging the trustworthiness of the immigration system and increasing the immigration case backlog, which is now over 2.7 million cases.

They come to America with hopes and dreams, some with ties of blood and friendship. They typically find work in the shadows, in the fields, in the homes, in the shops and restaurants. They fill the gaps in the labor market but are often trapped in a system that does not match their skills and needs, which only grows the ranks of the undocumented.

They used to come mostly from Central America and Mexico, but now they are coming from all over the world. They brave the Darién Gap, the jungle that separates Colombia and Panama, the jungle that was once a wall for those from the south. They cross it by the hundreds of thousands, with their families, with their children, facing dangers and hardships beyond belief.

Many are from Venezuela, where life has become unbearable, but there are others, from Haiti, Colombia, Ecuador, Asia, the Middle East, from Africa. Many of them do not have kin or friends in the U.S., as the Central American and Mexican migrants do, so they end up in shelters in big cities like New York, Chicago and Denver, instead of in homes and communities.

My Take: Create Legal Pathways

While the U.S. economy has bounced back and created a huge demand for workers, many of whom are aging out of the workforce, the U.S. border has seen a surge of migrants who are desperate for work but have no legal way to enter the country.

Rather than just blocking these migrants from entering the U.S., the government should establish legal channels for them to come from their home countries—a step that would ease the American labor shortage and enhance the well-being of millions of people.

Make no mistake, these migrants come to this country to work. They are not only escaping from corruption, violence and insecurity, but also seeking employment opportunities. They would not risk a long, perilous, and uncertain trip if they did not believe there were better prospects at the other end.

And they are right. Jobs are waiting for them. Our labor force—and indeed, our country’s future—relies heavily on migrants.

The U.S. grants about one million new green cards each year, along with 400,000 new students and over a million temporary workers and exchange visitors. Most immigrants are legally in the country, and they come from diverse countries, with Asia and Latin America being the largest sources.

Currently, almost 14 percent of the U.S. population and 17 percent of the workforce are foreign-born, and 1 in 4 Americans has at least one parent who was born abroad. Immigration is the main driver of population growth, and it will be the only one after 2042, according to current projections.

Given this situation, the answer seems clear: Let more people in who will fill those jobs through a legal process. But we are not doing that. The result is that in any given month in 2023, there were eight to 10 million jobs vacant.

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Mexico Cautiously Turns to Chinese Brands

Mexico is actively seeking foreign investment to boost its economy, with a focus on attracting investors from the United States, still the largest economy in the world. That's pretty much a no-brainer.

However, restrictions on Mexican trucking carriers entering the U.S. and delivering between U.S. destinations have persisted for decades, influenced by environmental and labor concerns.

The Mexican automotive industry, in particular, has faced challenges, with the United States-Mexico-Canada Agreement which introduced wage standards for autoworkers that the U.S. and Canada can easily meet, but which pose difficulties for Mexico.

Both the Trump and Biden administrations have shown a degree of disdain for Mexico's automotive industry, contributing to an atmosphere where now Chinese electric vehicle makers, including MG, BYD, and Chery, are exploring building large assembly plants in Mexico.

Washington has expressed concerns about the influx of Chinese investment in Mexico, knowing full well that Chinese companies (and by extension the Chinese government) seek to develop a strategic and extensive influence in Latin America, adding complexity to the ongoing U.S.-China trade war.

Mexican officials acknowledge the need for caution in considering Chinese investments due to potential repercussions with the U.S. While Mexico, as the world's seventh-largest carmaking nation, stands to benefit from disruptions in global supply chains caused by the COVID-19 pandemic and the U.S.-China trade war, the preference is for American investment.

However, longstanding criticisms of Mexico's automotive industry by successive U.S. administrations have led to a situation where Chinese investments become an attractive alternative. In short, U.S. policy might be inadvertently pushing Mexican authorities into the Chinese camp.

The growing interest of Chinese companies in the Mexican market, particularly in electric vehicles, reflects Mexico's strategic advantages, including cheaper labor, a well-established car supply chain, and access to the USMCA.

The U.S., in its competition with China in electric vehicle manufacturing, has implemented stringent measures to exclude Chinese products from its supply chain, creating a complex landscape for Chinese investments in Mexico.

As Mexico navigates its economic path, balancing U.S. concerns, its dependence on U.S. exports, and the appeal of Chinese investments, the story underscores the need for the U.S. to reconsider protectionist measures and recognize the significance of trading relationships for both nations' economic power.

Bipartisan Concern Over Sale of U.S. Steel

The proposed $14.1 billion acquisition of U.S. Steel by Japan's Nippon Steel is sparking concerns about its potential impact on national security and supply chains.

National Economic Adviser Lael Brainard emphasized the need for a thorough investigation, stating that the deal warrants "serious scrutiny" by the interagency committee on foreign investment, empowered by Congress and strengthened by the Biden administration.

U.S. Steel and Nippon Steel have notified the Treasury Department, expressing their commitment to a comprehensive review. The acquisition, announced earlier this week, has raised bipartisan concerns, with lawmakers and unions questioning the deal's implications for domestic steel production and workers.

The United Steelworkers union voiced concerns about the future of domestic steel production. Lawmakers, including Sen. John Fetterman and three Pennsylvania Democrats, sent a letter to Nippon Steel seeking clarity on the retention of U.S. steelworkers and compliance with union contracts.

In a broader economic context, the acquisition reflects a shift in the nation's economy from manufacturing to services and technology. U.S. Steel, once the world's most valuable company, played a pivotal role in building America's economic prowess, but its decline in recent decades mirrors the broader transformation of the economy.

The deal with Nippon Steel comes as U.S. Steel faces challenges, having been relegated from the Dow Jones Industrial Average in 1991. The company's historical significance, dating back to its formation in 1901, saw it become the world's first billion-dollar company. However, changing economic landscapes and shifts in focus towards information and finance led to its diminished position.

Ironically, the protectionist measures implemented by the U.S., including tariffs on foreign steel, have contributed to the foreign takeover of an iconic American manufacturer. U.S. Steel's assets, influenced by industrial policy and tariffs, have become politically significant, particularly as Washington's spending on infrastructure and green energy drives demand for steel.

While the deal faces scrutiny for potential antitrust concerns, it could serve as an American-Japanese counterbalance to China's steel dominance. However, the same politicians advocating for tariffs and industrial policy are now raising national security concerns about the deal.

The complexities surrounding the acquisition extend to potential implications for U.S.-Japan relations, with Japan being a close ally. The Biden administration may navigate the regulatory review carefully to avoid straining critical collaborations on issues such as China and semiconductor production.

Freight Prices Soar With Attacks on Shipping

A determined group of militants in Yemen, stemming from the Israeli-Hamas conflict in Gaza, has launched attacks on crucial shipping traffic in the Red Sea straits, introducing a new element of instability to the global economy.

The Houthi militia in Yemen characterizes their hijackings and missile/drone launches at commercial ships as a just campaign to compel Israel to stop military action in Gaza.

Amid escalating tensions in the Red Sea, shipping companies, including industry giant Maersk, have created a dual challenge for global logistics managers, grappling with both surging ocean and air freight prices and the predicament of stranded cargo.

The surge in ocean freight prices unfolded rapidly, driven by an increasing number of vessels diverting from the Red Sea. Logistics managers reported a staggering ocean freight rate of $10,000 per 40-foot container from Shanghai to the U.K., a stark contrast to the previous week's rates of $1,900 for a 20-foot container and $2,400 for a 40-foot container. Truck rates in the Middle East have also more than doubled.

Alan Baer, CEO of OL USA, emphasized the need for clarity on the substantial rate hikes, pointing out that the current situation differs from the slower build-up in freight prices during the COVID-19 pandemic. The redirection of vessels in real-time, with freight rates spiking between 100 to 300 percent in certain trade lanes, raises questions beyond conventional supply and demand dynamics.

As of Thursday morning, 158 vessels, carrying over 2.1 million cargo containers valued at an estimated $105 billion, are rerouting away from the Red Sea, according to Kuehne + Nagel. Companies like IKEA acknowledge the potential impact on product availability, prioritizing safety and closely monitoring the situation to explore alternative supply options.

Simultaneously, a U.S.-led multinational task force is en route to the Middle East to safeguard vital shipping lanes, responding to Houthi threats. Despite the rising tensions, energy markets have shown relative calm, with only modest fluctuations in crude oil and natural gas prices.

BP's decision to halt all shipments through the Red Sea, prompted by attacks from Iran-aligned Houthi militants targeting ships in response to Israel's actions, has further unsettled energy markets. Other major shipping companies, including A.P. Moller-Maersk and Hapag-Lloyd, have also suspended their vessels' entry into the southern Red Sea after attacks on their ships, citing concerns about the heightened security situation.

The attacks on cargo vessels in the Bab el-Mandeb Strait have elevated risks for ship operators, leading to increased costs and prompting countries to reassess security measures. The situation remains complex, with geopolitical tensions, security concerns, and economic implications converging in the already challenged global supply chain.

Warehouse Construction Boom Has Ended

Higher?interest rates?are choking off the construction of warehouses that feed America’s growing e-commerce appetite, putting an end to a building boom that remade vast swaths of the country.

Over the past decade, warehouses became an investor darling as investors such as Blackstone and Singapore sovereign-wealth fund GIC bought up vast portfolios. During the pandemic, developers plastered cities and suburbs with logistics facilities to profit from surging rents and seemingly insatiable demand from?Amazon and other e-commerce companies.

Now, many large investors are cutting back. Industrial property construction starts tumbled 48 percent in the first nine months of the year compared with the same period in 2022, according to data company?CoStar. That was the largest drop for that period since 2009.

The dollar volume of industrial real estate sales fell by 45 percent in the third quarter from a year earlier, according to MSCI Real Assets. “It was unsustainable, but no one knew how long this party was going to last,” Vince Tibone, managing director at analytics firm Green Street, told The Wall Street Journal.

Higher debt costs and slowing leasing demand are the main culprits. The rates on many types of commercial mortgages have roughly doubled over the past year, and land prices haven’t fallen enough to make up for that, brokers say, making it harder to pay for construction.

“We have come back down to earth a little bit,” Craig Meyer, president of real-estate brokerage?JLL’s industrial business in the Americas, told The Journal.?Steeper interest rates have also pushed down property values: Green Street estimates that industrial real-estate prices are down 16 percent from their peak.

Finally, vacancy rates have inched up as some e-commerce firms slow their leasing and the recent building boom increases competition among landlords. All of that makes developers?more reluctant to build. “It doesn’t pencil to develop right now,” Tibone said.

Unlike in the?office sector, where future demand is?now in doubt, warehouse landlords are hardly in crisis. Construction is still high by historical standards, vacancies are low and mortgage defaults are rare. E-commerce activity continues to grow and the industry could thrive again if interest rates continue their recent decline.

A Blackstone spokeswoman told The Journal that the sector will benefit from less construction. “We continue to see healthy supply and demand fundamentals, particularly for high-quality, infill assets, with our portfolio more than 96 percent occupied and rents in our markets up 8 percent year over year,” she said.

Minimum Wage Increases in 22 States on Jan. 1

The big picture:?More states are requiring a $15 an hour minimum wage —?including New York, Maryland, and New Mexico —?a dozen years after Fight for $15 kicked off its campaign.

For those making?minimum wage, it's an automatic raise — but it also ripples out. Typically, increasing the wage floor for the lowest earners pushes up pay for those who make a bit more than the minimum, as employers have to adjust pay scales upwards.

Due to inflation, the dollar amount doesn't quite mean what it used to. In 13 states wages are going up because they're indexed to inflation, including?California,?Ohio,?and?South Dakota.

Three more states and Washington, D.C., are set to raise the wage later in the year. The last time the federal minimum wage ($7.25) was increased was in 2009.

South Dominates U.S. Population Growth

The U.S. population grew 0.5 percent this year, according to Census Bureau estimates released Tuesday, as the pandemic’s effects on births, deaths and immigration continued to fade.

The increase for the year that ended June 30 was?similar to the previous year, when the population grew 0.4 percent, reports The Wall Street Journal. The new estimate shows the population has grown to 334.9 million, up 1.6 million people in the past year.

In the decade before the pandemic, the U.S. grew by an average of 2.1 million people a year. The slow growth showed the combined effects of elevated death rates, which are dropping from pandemic highs but remain higher than pre-pandemic levels, and record low birth rates.

About 504,000 more people were born than died during the year.?This surplus has long been a major source of growth and was as large as 1.4 million as recently as 2014. Its shrinkage has boosted the role of immigration in population growth. Net migration to and from the U.S. rose to 1.1 million for the year, the bureau said, up from about 1 million the previous year.

It accounted for 70 percent of overall growth, up from about 40 percent a decade ago. Top gainers included medium and small states like South Carolina (1.7 percent) and Idaho (1.3 percent), and large ones like Florida, which grew 1.6 percent, and Texas, increasing by 1.6 percent.

Eight states lost population, down from 19 the previous year. Losing the most in percentage terms: New York (down 0.5 percent) and Louisiana (dropped 0.3 percent). California, the nation’s most populous state, lost about 0.2 percent.

The population in the South rose 1.1 percent while the West and Midwest each grew 0.2 percent. The Northeast dropped by about 0.1 percent. The South added 1.4 million residents, accounting for 87 percent of the nation’s growth this year, the Census Bureau said.

Ditch the Jargon

Probably the single biggest thing that annoys me about consultants -- and I am one -- is how they talk. So many try to puff themselves up by using corporate jargon that means a lot of nothing.

Bullshit, as Princeton philosopher Henry Frankfurt defines it, is “speaking without regard to the truth.” It is, in essence, empty talk and pointless.

Terms like “new normal,” “company culture” and “circle back” topped a recent list of most annoying examples, according to?a survey?of more than 1,500 Americans conducted by language learning platform Preply. “Always use the simpler word,” Mark Cuban told Wired in an October?video Q&A.

Cuban is in agreement with the likes of fellow billionaire Warren Buffett, who likes to keep things?as simple as possible. Buffett writes his annual shareholders letter as if he’s speaking to his two sisters — which, of course, means no jargon —?he said in 2019.

Elon Musk, currently the world’s wealthiest person, also disdains jargon. “Don’t use acronyms or nonsense words for objects, software or processes at Tesla. In general, anything that requires an explanation inhibits communication,”?he wrote in a 2018 letter to Tesla employees. “We don’t want people to have to memorize a glossary just to function at Tesla.”

Using overly complicated words to sound intelligent has the?opposite effect: It makes you sound less intelligent and can also muddle your message,?studies show.

“We use jargon when we’re feeling insecure, to try to help us feel like we have a higher status,” Adam Galinsky, a Columbia Business School professor of leadership and ethics,?wrote in an August article?for the school’s website.

As a former newspaperman, I purposely write on a 10th-grade level to be understood. I am not here to impress or bullshit. I am here to help.

What We Are Reading and Watching

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The City That’s Trying to Replace Politicians With Computers (It’s Working) WSJ

Blood, Guns, and Broken Scooters: Inside the Chaotic Rise and Fall of Bird?Wired

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Who will win and lose the AI revolution?: Top economists Robert Reich, Jeffrey Sachs and Mariana Mazzucato discuss CNBC

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