In Chicago’s Little Village, the Trump administration’s sweeping deportation push has paralyzed the economy.
Business owners in Little Village, which is 81% Hispanic, said customers are too frightened to walk the streets of Chicago’s second busiest commercial corridor. Sales have plunged, employees are staying home, and stores have temporarily closed since the administration’s deportation push in Chicago began on September 8. More than 1,000 people have been arrested in the Department of Homeland Security’s “Operation Midway Blitz.”
The economic fallout from deportations is typically focused on the impact to industries with large unauthorized immigrant workforces, such as construction and agriculture. But undocumented immigrants aren’t just people who simply go to work each day. They’re consumers, too. They spent roughly $300 billion in 2023, buying goods and services that power the economy.
“It’s killing business,” said Mike Moreno, the owner of Moreno’s liquor store and speakeasy bar. His father opened the store in Little Village in the 1970s, and it was the first Latino-owned liquor store in Illinois.
He said sales have dropped 60% since September. Local residents and longtime business owners alike have been traumatized by immigration agents roaming around the neighborhood, Moreno said, arresting both unauthorized immigrants and US citizens.
“They’re going up and down the streets around in loops to scare us,” he said. “I never thought in a million years I’d see something like this.”
Marcela Rodriguez, a franchise operator of Los Mangos, a small Mexican-style ice cream chain, said “people are not stepping outside. Kids are not going to school. It’s unbelievable.”
Her business “just completely went downhill” beginning in September, and several fearful employees changed their schedules to prepare food when the store is locked and closed to customers.
Ice cream sales now correlate with how visible immigration agents are in the neighborhood, she said.
“On quiet days with not a lot of detainments, we see an uptick in customers.”
‘Economic lifeline’
The Trump administration said last month it’s on track to deport 600,000 unauthorized immigrants this year.
But that push is hurting businesses and local economies that rely on immigrants, both legal and undocumented, who buy everything from food to cars to homes.
A record 14 million unauthorized immigrants, roughly 5.6% of total households, lived in the United States in 2023. Twenty-six million people live in a household with at least one person who lacks legal status.
Not only does this group spend hundreds of billions annually, they also paid more than $90 billion in federal, state and local taxes in 2024, helping fund social services and programs like Social Security. Sales, property, business and other taxes they paid help prop up municipal and state budgets.
That’s why a slowdown in Little Village threatens to have a spillover effect on Chicago. The city may see lower tax revenues from retail sales, as well as store closures, reduced orders along the supply chain, and a hit to the real estate market, said Teresa Córdova, the director of the Great Cities Institute at the University of Illinois Chicago.
Little Village became a landing spot for Hispanic immigrants coming to the United States beginning in the 1960s and 1970s. They helped stabilize the neighborhood, which had emptied out as Chicago lost manufacturing jobs and people left for the suburbs.
“Were it not for Latinos in Chicago, we would not be able to revitalize like we did,” Córdova said.
A similar story of immigrants reviving areas in decline played out in many northern industrial cities during the mid-twentieth century and later in the South, said A. K. Sandoval-Strausz, a history professor at Penn State University and author of the book “Barrio America: How Latino Immigrants Saved the American City.”
“The influx of immigrants to these neighborhoods has been an economic lifeline,” he said.
But White House spokesperson Kush Desai called looking at how much unauthorized immigrants spend and pay in taxes in isolation an “idiotic exercise” because “the costs that Americans pay due to illegal immigration are incalculable: crime, strained healthcare systems, inflated real estate costs, and schools being overburdened with costly ESL students.”
The White House pointed to research from the Federation for American Immigration Reform, which advocates for lower immigration levels, that said American taxpayers spend at least $182 billion annually to cover costs for unauthorized immigrants.
Mazola corn oil and subprime car loans
Immigrants and families unsure of their future in the United States are sending more money to their home countries — remittances to many Latin American countries are seeing double-digit increases — and they’re tightening their wallets.
TD Bank estimated that undocumented workers who are spending less will subtract 0.7 percentage points from consumer spending growth this year.
When Tricolor, a subprime auto lender primarily for unauthorized immigrants in the Southwest, filed for bankruptcy last month, analysts said it was a sign of the pressure on the economy catering to undocumented immigrants.
Major food brands and retailers are also noticing an impact.
PepsiCo, Constellation Brands, Mondelez, Wingstop and Ross said Hispanic customers are spending less, particularly at stores concentrated in heavily Hispanic neighborhoods.
Sales of Mazola corn oil have dropped among Hispanic consumers in the South, parent company Associated British Foods said last month on an earnings call.
“We have a very large share of Hispanic consumers in Mazola, and there’s a lot of fear in that community,” CEO George Weston said. “We really hope that that’s temporary for all sorts of reasons.”
But the administration is ramping up its detention capabilities to reach its goal of one million deportations a year, and Republicans’ One Big Beautiful Bill Act triples the budget for Immigration and Customs Enforcement (ICE).
The further the Trump administration goes, the larger the blow will be to consumer spending, employment and taxes that boost cities and states, said Eric Rodriguez, the senior vice president of policy and advocacy at UnidosUS, a Hispanic civil rights group. Mass deportations have been found to reduce employment and wages for native-born citizens, too.
“There’s no sign that what we’re seeing right now is going to stop or de-escalate,” he said. “As the government builds up mass deportations, the economic effects will be greater.”
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