ICE came to town and left behind weakened economies

After Hernandez's parking lot became a well-known hangout spot for Immigration and Customs Enforcement officers, the lines that Hernandez grew accustomed to seeing each morning at his stores disappeared. The rebound in traffic Hernandez hoped to see after the end of the surge never materialized.

"We're barely — literally barely — surviving," Hernandez told CNBC in an interview inside one of his stores, where Spanish-language music played through speakers and piñatas dangled from the ceiling. "The damage has been done."

This summer, Hernandez shuttered Colonial Market's location on Lake Street, the heart of Minneapolis' Hispanic business community. Hernandez had spent savings and borrowed money against his house to open the store two years prior. He said sales at his stores have declined by roughly 60%.

The financial turmoil facing Hernandez and others in Minneapolis is being experienced, to varying degrees, in communities across the country. As President Donald Trump has directed federal immigration officers to carry out mass deportations in major U.S. cities during his second term, a growing body of research shows that a monthslong economic chill followed.

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 an analysis from University of Pennsylvania professor Zeke Hernandez. (No one with the surname Hernandez mentioned in this article is related to one another.)

Collectively, he found that resulted in around 8 billion fewer visits and billions of dollars worth of lost spending in those places that year.

"You are creating recession-like conditions in targeted neighborhoods," Zeke Hernandez said. "It's like a localized recession."

Operation Metro Surge, which was billed as the largest-ever immigration enforcement action by the Department of Homeland Security, ran from early December to mid-February in Minneapolis. Months after its official conclusion, local businesses were still trying to get back on steady ground while community leaders calculate the economic effects.

The Lake Street Council said immigrant-owned businesses in the commercial district cumulatively lost $46 million in December and January. Council members went door to door in the months after the surge to help small business owners — several of whom do not speak English as their first language, if at all — complete paperwork for emergency relief funds.

At bars and eateries in the ZIP codes containing the Lake Street corridor, year-over-year foot traffic underperformed nearby neighborhoods for months after the surge officially ended, according to data analyzed exclusively for CNBC by Advan Research. That gap peaked in March at nearly 10 percentage points.

Across the board, the Minneapolis government estimated that the City of Lakes lost almost $700 million worth of economic activity between December and April from the surge. Mayor Jacob Frey told CNBC that figure was likely conservative and that the city was left grappling with "tail" effects from the operation.

City lawmakers released about $7 million for local businesses and more than $3 million in rental assistance. Frey acknowledged that would not be enough funding to resolve a situation that many in the community compared with a natural disaster.