Communities targeted by large-scale immigration enforcement operations are still counting the cost long after federal officers departed, with businesses and local governments struggling to recover.
President Donald Trump directed federal immigration officers to carry out mass deportations in major U.S. cities during his second term, triggering what researchers describe as localised economic recessions.
Cities where immigration raids took place in 2025 experienced a nearly 3% decline in weekly foot traffic and a more than 6% drawdown in spending, according to University of Pennsylvania professor Zeke Hernandez.
Zeke Hernandez found those declines collectively resulted in around 8 billion fewer visits and billions of dollars in lost spending across targeted communities that year.
“You are creating recession-like conditions in targeted neighborhoods,” Zeke Hernandez said. “It’s like a localized recession.”
In Minneapolis, Operation Metro Surge ran from early December to mid-February and was billed as the largest-ever immigration enforcement action by the Department of Homeland Security.
The Lake Street Council said immigrant-owned businesses in the Minneapolis commercial district cumulatively lost $46 million in December and January alone.
Minneapolis Mayor Jacob Frey said the city lost almost $700 million worth of economic activity between December and April, a figure he described as likely conservative given ongoing “tail” effects from the operation.
“Traditionally, disaster relief is not a partisan issue,” Frey, a Democrat, told CNBC. “Traditionally, disasters are not caused by the government themselves.”
City lawmakers released around $7 million for local businesses and more than $3 million in rental assistance, though Frey acknowledged that funding fell well short of what was needed.
At bars and eateries in ZIP codes containing the Lake Street corridor, year-over-year foot traffic underperformed nearby neighbourhoods for months after the surge officially ended, with a gap peaking at nearly 10 percentage points in March, according to data from Advan Research.
Employment dropped in U.S. cities experiencing immigration enforcement surges, according to a Brookings Institution analysis, which found that the most-impacted cities had a 0.4% employment shortfall six months after a respective surge.
Minnesota’s seasonally adjusted unemployment rate in 2026 eclipsed the national average for the first time in approximately 19 years, according to the Bureau of Labor Statistics.
“Operation Metro Surge can sometimes be perceived as only affecting undocumented workers,” said Tyler Schipper, an economist at the University of St. Thomas. “That wasn’t the case at all.”
Daniel Hernandez, owner of Colonial Market grocery stores in Minneapolis, said sales at his stores declined by roughly 60% after his parking lot became a known gathering point for ICE officers.
Hernandez shuttered the Colonial Market location on Lake Street this summer, having spent savings and borrowed money against his house to open the store just two years prior.
“We’re barely — literally barely — surviving,” Hernandez told CNBC. “The damage has been done.”
Advocates for Hispanic Americans warn that enforcement crackdowns threaten a demographic that has become a key driver of national economic growth, with the Latino Donor Collaborative telling CNBC that U.S.-based Latinos, if counted as their own country, would represent the fourth-largest GDP in the world at $5.1 trillion.
The growth rate for average Hispanic household spending in the U.S. decreased by about 2 percentage points over the last two years, according to Numerator, while Hispanic consumers were 50% more likely to cite immigration-related policy as a top issue in a 2025 survey.
“We’re being challenged right now,” said Sol Trujillo, co-founder of the California-based Latino Donor Collaborative. “These policies can be highly disruptive to our economy.”
The national number of ICE arrests in July rose to its highest level since Trump returned to office, according to the Deportation Data Project, leaving community members anxious that enforcement could intensify once more.
“For immigrants who are still here in Minneapolis and in the surrounding areas, that fear never left,” said Miguel Hernandez, owner of Lito’s Burritos on Lake Street. “They are operating at an intense level of caution still to this day.”
Daniel Hernandez faces possible eviction later this month after falling behind on rent due to lost sales, with Colonial Market raising more than $3,000 through a GoFundMe campaign to keep the doors open.
“During the storm, you can feel the winds. But once the storm is over, all that you see is destruction,” he said. “That’s what happened here.”