The U.S. will need more immigrants and a sensible trade policy if it's going to achieve breakout economic growth, Dallas Fed President Robert Kaplan said Thursday.
Kaplan made his pitch for an aggressive but responsible approach to immigration during an interview with CNBC, saying that demographics are one of the key reasons the domestic economy has been stuck in a mediocre growth pattern.
"One of the big challenges we face in the United States and one of the reasons why GDP growth has been so sluggish is our population is aging and our workforce growth has been slowing," he said in an interview from the Fed's annual conference in Jackson Hole, Wyoming.
Kaplan is relatively optimistic on growth, expecting GDP gains in excess of 2 percent this year. However, he said pockets of weakness need to be addressed.
"There's a big skills gap in this country. There's hundreds of thousands if not millions of jobs that employers can't fill, and everywhere I go I hear about this," he said. "We need to grow the workforce if we're going to grow the GDP."
The comments come during a national debate over how strict immigration policy should be.
President Donald Trump campaigned on an aggressive stance, vowing to build a wall along the Mexico-U.S. border that he said would curtail the flood of illegal immigrants.
However, business leaders and economists say a healthy immigration flow is needed while the aging population dampens labor force participation.
"Immigrants and their children have made up over half the workforce growth in this country over the last 20 years. They're likely to need to make up more than half in the next 20," Kaplan said. "And one of the key distinctive competencies in the United States is our ability to take people, including my grandparents, assimilate them and make them productive members of society. ... I would be very loathe to see us lose that distinctive competence."
Kaplan also voiced support for international trade agreements, though he agreed with the administration's position that NAFTA should be renegotiated.
"Those trade relationships are essential to U.S. competitiveness and growing U.S. jobs," he said.
In other matters, Kaplan said he believes the Fed should begin the process of reducing its balance sheet, or portfolio of debt it accrued during its stimulus efforts, likely in September. However, he said the Fed should wait to see what the inflation data show before deciding whether to hike rates again this year.