ICE immigration raids leave Minneapolis and other US cities facing localized recessions

The cost of Operation Metro Surge

Federal immigration raids designed to deport undocumented migrants are triggering severe, localized recessions in US cities, leaving independent businesses facing millions of dollars in losses long after the enforcement operations end.

In Minneapolis, where the Department of Homeland Security ran its massive "Operation Metro Surge" from December to February, the city government estimates that the local economy lost nearly $700 million in activity. On Lake Street, the heart of the city’s Hispanic business community, immigrant-owned shops and markets lost $46 million in just two months, according to the local Lake Street Council.

For business owners like Daniel Hernandez, who runs the Colonial Market grocery stores, the impact has been devastating. After Immigration and Customs Enforcement (ICE) officers began using his car park as a staging ground, his foot traffic vanished. He has since closed one of his locations, seen sales drop by 60 percent, and is now fighting eviction after falling behind on rent.

"We're barely – literally barely – surviving," Hernandez said. "The damage has been done."

Localized recessions and falling footfall

The economic chill is not confined to Minnesota. An analysis of 2025 immigration raids by University of Pennsylvania professor Zeke Hernandez revealed a nearly 3 percent drop in weekly foot traffic and a 6 percent fall in spending in targeted areas. Collectively, this kept consumers away to the tune of 8 billion fewer visits nationwide.

"You are creating recession-like conditions in targeted neighborhoods," Zeke Hernandez said.

A separate report by the Brookings Institution found that highly targeted cities suffered a 0.4 percent employment shortfall six months after a surge. In Minnesota, the state's seasonally adjusted unemployment rate rose above the US national average for the first time in almost two decades.

The fallout has also disrupted non-immigrant institutions. The Minneapolis-based Children's Theatre Company lost $500,000 and was forced to cut staff after National Guard blockades made its venue inaccessible during the height of the enforcement operation.

A debate over economic health

The White House has defended the enforcement operations. Spokesperson Lauren Bis stated that previous surges in undocumented immigration threatened the country's long-term fiscal health, contributed to inflation, and suppressed wages for American workers. A spokesperson for the Department of Homeland Security added that illegal immigration acts as a labor-supply shock that drives up local rents.

However, business advocates warn that aggressive crackdowns damage a vital economic engine. The Latino Donor Collaborative notes that if US Hispanic households were a standalone nation, their gross domestic product would be the fourth-largest in the world at $5.1 trillion.

While some community events have brought temporary boosts to Lake Street, business owners remain on edge. Miguel Hernandez, who owns Lito's Burritos, said some of his legally authorised staff fled the country out of fear, and he even sold his grey SUV because local children mistook it for an ICE vehicle.

For those left behind, the trauma lingers. "During the storm, you can feel the winds," Daniel Hernandez said. "But once the storm is over, all that you see is destruction."