Your competition isn’t new grads. It’s experienced engineers in other countries who will work for half your wage in your own city on an H1B or similar.

You're half correct. H1Bs in your own city aren't working half your wage.

However, engineers in developing countries will work half your wage, remote from their home, where that's a great salary where they live. When the average annual salary in India is the equivalent of $4,200 USD/year, there are a lot of talented engineers there that if they don't win the H1B lottery, will end up working for big tech remote.

You're mistaken thinking those engineers aren't facing the same market downturn. AFAICT, it's exactly the same in Europe. The only difference is that in Europe folks weren't paid exorbitant salaries like their US colleagues were.

H1Bs don’t work for “half your wage”. This is a myth. H1Bs have a higher average salary.