Plummeting fertility rates and major demographic shifts are expected to slow U.S. population growth in the years ahead, with a steady flow of immigrants needed to offset the economic consequences.

Why it matters: The result is a fresh collision of two contentious issues — immigration policy and economic growth — that will continue to shape political debates for decades.

The intrigue: The current backdrop offers a preview of what's to come. Efforts to stem the border crisis are happening alongside conditions unique to the pandemic-era economy.

• There's been a huge shift in the dynamics of the 2020s relative to the previous decade: Huge demand is outstripping supply — including in the labor market. So long as that persists, the U.S. will be starved for more workers.
• Rampant worker shortages mean companies will not have adequate staff to meet demand for a range of goods and services. That will drive up labor costs.
• "If you don't have workers to do the work, there's going to be a scarcity. And there will be upward pressures on prices. We've seen this in a number of instances," Raphael Bostic, a top Federal Reserve official, said this month.

Between the lines: President Biden is facing widespread voter discontent around the border crisis and the economy. Yet high immigration rates have played a notable role in offsetting inflation.

• Policymakers say the mass immigration of recent years helped heal that type of labor market imbalance, and has helped bring inflation down from the 2021-2022 surge.

What they're saying: During an appearance at Stanford University this month, Fed chair Jerome Powell said that soaring immigration explains, at least in part, why the economy managed to stave off a recession last year, despite the odds.

• "Some part of that is there are significantly more people working in the country," Powell said.
• "It's just reporting the facts to say that immigration and labor force participation both contributed to the very strong economic output growth that we had last year," Powell told lawmakers earlier this year.

What to watch: Unfavorable demographics — including the lowest fertility rate on record — mean tensions between immigration policy and economic risks will be intertwined in the years ahead. Baby boomers are exiting the workforce, and overall population growth is expected to slow.

• Beginning in 2040, immigrants will account for all of population growth "in part because fertility rates remain below the rate that would be required for a generation to replace itself in the absence of immigration," the nonpartisan Congressional Budget Office projects.
• "There is a sense in which immigration is now offsetting the decline in fertility," CBO director Phillip Swagel told Congress earlier this year.
• Notably, net immigration will particularly bolster the size and growth of those aged 25-54, the key working-age demographic, the agency says.

Between the lines: The influx of immigrants means state and local resources have been stretched to accommodate spiking population sizes, which has angered local residents.

• That may help explain why more than half of Americans say that "illegal" immigration has a negative impact on the economy, according to the latest Axios Vibes survey. (Reality check: higher immigration rates came when the worker-hungry economy needed it most.)
• Economists at Bank of America said this week that immigration has boosted the domestic workforce. But they add that major population shifts, like the one underway, is a reminder that community infrastructure "cannot be quickly recalibrated to new equilibria in the near term."