ICE raids hurt spending and jobs in U.S. cities, study shows

MINNEAPOLIS — It’s been several months since Operation Metro Surge ended. The same can’t be said about the crisis facing Daniel Hernandez’s Colonial Market grocery store.

The lines that used to be seen each morning at Hernandez’s store disappeared after Hernandez’s parking lot became a well-known hangout for Immigration and Customs Enforcement agents. The traffic recovery Hernandez had hoped for after the surge ended never materialized.

“We’re barely, literally barely surviving,” Hernandez told CNBC in an interview inside the store, where Spanish-language music was playing from speakers and piñatas were hanging from the ceiling. “The damage has been done.”

This summer, Mr. Hernandez closed the Colonial Market store on Lake Street, the heart of Minneapolis’ Hispanic business community. Two years ago, Hernandez used his savings to borrow money and use his house as collateral to open the store. He said store sales were down about 60%.

The economic disruption faced by Hernandez and others in Minneapolis is being experienced to varying degrees in communities across the country. A growing body of research shows that President Donald Trump’s direction for federal immigration officials to carry out mass deportations in major U.S. cities during his second term continued to cool the economy in the months that followed.

An analysis by Zeke Hernandez, a professor at the University of Pennsylvania, found that in 2025, cities with immigration raids saw weekly pedestrian traffic decline by nearly 3% and spending by more than 6%. (The people mentioned in this article with the surname Hernandez are not related to each other.)

Collectively, the result was approximately 8 billion fewer visits that year and billions of dollars worth of lost spending at those locations.

“It’s creating a recession-like situation in the targeted areas,” Zeke Hernandez said. “It’s like a local recession.”

Operation Metro Surge, touted by the Department of Homeland Security as the largest immigration crackdown in history, was conducted in Minneapolis from early December to mid-February. Months after the official conclusion was reached, local businesses were still trying to return to a stable position while regional leaders calculated the economic impact.

The Lake Street Council announced that immigrant-owned businesses in the business district lost a total of $46 million in December and January. In the months following the surge, City Council members went door-to-door to help small business owners, some of whom did not speak English as their first language, complete the process for emergency relief funds.

Bars and eateries in the ZIP code that includes the Lake Street corridor experienced lower year-over-year foot traffic than neighboring areas in the months after the surge officially ended, according to data analyzed exclusively for CNBC by Advan Research. The difference peaked in March at nearly 10 percentage points.

Overall, the Minneapolis city government estimates Lake City lost about $700 million worth of economic activity from December to April due to the surge. Mayor Jacob Frey told CNBC that the numbers are likely conservative and that the city continues to grapple with the “tail” effects of the operation.

The City Council has disbursed approximately $7 million to local businesses and more than $3 million in rental assistance. Frey acknowledged that’s not enough money to solve a situation many area residents compare to a natural disaster.

“Traditionally, disaster relief is not a partisan issue,” Frey, a Democrat, told CNBC. “Traditionally, disasters are not caused by governments themselves.”

U.S. cities hit by a surge in immigration enforcement have lost jobs, according to an analysis released last month by the Brookings Institution. Six months after each surge, the report found that the most affected cities had a 0.4% job shortage.

According to the Bureau of Labor Statistics, Minnesota’s labor force participation rate fell faster than the nation as a whole last year. The North Star State’s seasonally adjusted unemployment rate in 2026 will exceed the national average for the first time in nearly 19 years.

“Operation Metro Surge is sometimes perceived as only affecting undocumented workers,” said Tyler Schipper, an economist at the University of St. Thomas, Minnesota’s largest private university. That was not the case at all.

Eviction notices in Minneapolis decreased in January and February compared to the same months a year ago, according to Homeline, a Minnesota-based tenant advocacy group. Eric Hauge, co-executive director of Homeline, said that while the surge caused some companies to cut hours, a combination of government housing funds and mutual aid programs likely helped cushion individuals’ finances.

As those funding sources dried up, the relative volume of eviction notices skyrocketed, Hauge said. Total notifications for the year to August increased by about 7% compared to the same period in 2025.

To supplement the surge in government aid, the Minneapolis Foundation has raised millions of dollars from city-based businesses. But RT Rybak, the nonprofit’s chief executive, said big companies were slower to speak out about the surge than after the death of George Floyd, a change he attributed to fear of retaliation from the Trump administration.

“I understand that there was extraordinary political pressure on these companies,” said Rybak, a Democratic former mayor of Minneapolis. “But I think it’s pretty well understood around here that this was not a crowning moment for the normally highly effective corporate philanthropy sector.”

Trump has made mass deportation a central pillar of his first term and 2024 campaign. Democrats are touting next month’s midterm elections as an opportunity for voters to show their dissatisfaction with his signature policies.

“The surge in illegal immigration under President Biden threatens the nation’s long-term fiscal health, contributing to record high inflation and suppressing wages for American workers,” White House Press Secretary Lauren Biss said in a statement to CNBC.

A spokesperson for the Department of Homeland Security, which oversees ICE, said “illegal immigration is a labor supply shock aimed at the bottom” that could drive up rents.

Advocates for Hispanic Americans warn that the immigration crackdown could hinder a demographic that is a major driver of the country’s economic growth. If U.S.-based Latinos created their own country, its gross domestic product would be the fourth largest in the world at $5.1 trillion, the Latino Donors Coalition told CNBC on Wednesday.

But according to the numerator, spending growth for the average Hispanic household in the U.S. has declined by about 2 percentage points over the past two years. In the market research firm’s 2025 survey, Hispanic consumers were 50% more likely to list immigration-related policies as a top issue.

“We are challenged right now,” said Sol Trujillo, co-founder of the California-based Latino Donors Cooperative. “These policies could wreak havoc on our economy.”

To be sure, it’s not just Hispanic consumers and businesses that are under pressure.

Children’s Theater Company, based in Minneapolis, was forced to cancel some performances after the National Guard lockdown made the venue inaccessible. After the theater reopened, managing director Ryan French said audience numbers were about half of what had previously been expected.

Due to poor ticket and benefit sales, the nonprofit lost about $500,000 in revenue and ended the fiscal year in the red. French said the 60-year-old organization has cut three jobs and shortened the hours of other employees.

Late last month, on a weekday in Minneapolis, residents called the surgery a “surge” and described major life events that occurred before and after the surgery. Weathered posters on the front of the building memorialized Renee Good and Alex Preti, two Americans killed by federal immigration agents during the operation. Signs were posted at homes and businesses throughout the city warning immigration officials that they were not welcome on private property.

Jason Chavez, a Minneapolis City Councilman who represents part of Lake Street, said many immigrant business owners used up their savings to keep their businesses afloat during the surge. Now, Chavez said local mom-and-pop stores may not be able to withstand smaller emergencies like burst pipes or severe weather.

Recently, new buds have appeared in these businesses. Lake Street Council’s World Cup viewing events and recent “Taco Tour” eating events have drawn crowds, giving the Lake Street Council hope that customers will return to the area. In August, Advan Research found that for the first time since the start of Operation Metro Surge, year-over-year growth in restaurant footfall in the Lake Street ZIP code exceeded that of surrounding areas.

However, local residents are concerned that immigration enforcement will be tightened again. Although the number of ICE arrests in Minnesota has slowed compared to earlier this year, the number of arrests nationwide rose in July to the highest level since President Trump returned, according to the Deportation Data Project.

“For immigrants who still live in Minneapolis and surrounding areas, that fear never went away,” said Miguel Hernandez, owner of Ritos Burrito on Lake Street. “They are still operating on high alert.”

Restaurant owners are seeing customer traffic plummet even days after headlines about immigration enforcement break out. Some employees with work permits left the country, fearing treatment by federal agents. he sold gray chevrolet After Tahoe said the children mistook them for ICE vehicles and began fleeing.

For the past few Sundays, one of the remaining stores at Colonial Market, owned by Daniel Hernandez, has been home to a pop-up market where immigrant entrepreneurs sell their wares. The owners said they invite Minneapolis police officers to patrol during the weekly event in the belief that the presence of local law enforcement equipped with body cameras will deter ICE officers.

But Daniel Hernandez said the pop-up’s increased traffic may not be enough for the location to survive.

He said the grocer could be evicted later this month after failing to pay rent during the soaring prices and subsequent decline in sales. Colonial Market has raised more than $3,000 through a GoFundMe campaign to keep its doors open.

“During the storm, you can feel the wind. But once the storm is over, all you see is destruction,” he said. “That’s what happened here.”