Economists believe that the post-pandemic surge in immigration is a key reason the economy has been able to grow

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Blockbuster job growth continues to power the U.S. economy, with the Bureau of Labor Statistics reporting 303,000 payrolls added in March.

Usually, such strong growth might signal that inflation could pick up. If employers see more demand for goods and services, they need to hire more workers — and if there aren’t enough workers, they have to increase pay, which increases the overall cost of running the business.

But while annual price growth, at more than 3%, remains above the Federal Reserve’s 2% target, it is still well below the 9% peak seen in the summer of 2022.

Economists increasingly believe that the post-pandemic surge in immigration is a key reason the economy has been able to grow steadily without pushing inflation higher, as the new arrivals have helped employers fill roles at levels of pay that have kept a lid on overall price growth .

In a note to clients published Friday, titled “Why we have both strong growth and lower inflation,” Goldman Sachs chief U.S. Economist David Mericle said rising immigration had boosted labor force growth. As a result, the strong demand that consumers continue to exhibit elsewhere is unlikely to raise prices by much, “if at all,” he said.

In fact, so far, measures of labor market “tightness,” like wages, “have continued to fall or move sideways, not rise,” Mericle said.

“Won’t stronger growth prevent inflation from falling or even reignite it?” he wrote. “We don’t think so.”

The Congressional Budget Office, a nonpartisan federal agency, was the first to cite the immigration surge that began in 2022 as the primary factor helping to expand the overall size of the U.S. labor force.

This year, the agency increased its projection of how large the U.S. labor force could be in 2033 by 5.2 million people. Most of that increase is expected to be a result of higher projected net immigration.

The Brookings Institution, a nonpartisan think tank, came to a similar conclusion earlier this month, saying the economy can now tolerate a more brisk pace of job growth without adding to cost concerns. “Faster population and labor force growth has meant that employment could grow more quickly than previously believed without adding to inflationary pressures,” Brookings said.

Wendy Edelberg, a former Federal Reserve economist now serving as director of Brookings’ Hamilton Project, told NBC News the net effect of immigration on inflation is not entirely obvious — but is likely marginal. Indeed, Fed Chair Jay Powell has expressed similar observations, saying the effect of the new wave of arrivals is “broadly neutral.”

What is clear, Edelberg said, is that the immigration surge will allow the economy to tolerate higher levels of job growth without overheating.

“Without immigration, if I’d seen an increase of 300,000, I would have been absolutely baffled that wages were not higher,” she said, citing the March jobs report released on Friday.