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Rhetoric in the presidential campaign so far, though, has not addressed the aging of the workforce or the growing ration of debt to U.S. GDP, both key barriers to U.S. growth, a top US Federal Reserve official advised on Friday.
“What we are hearing on trade and immigration may be pushing the other way,” Kaplan said of current campaign rhetoric.
Republican presidential candidate Donald Trump has said he would rewrite trade agreements and would mount a wall to keep out Mexican immigrants, among other policies seen as anti-immigrant. Democratic presidential candidate Hillary Clinton has also retreated from a formerly pro-free trade stance.
“The first thing the president’s got to do is focus on policies to grow the workforce,” Dallas Fed told the Security Traders Association, in response to a question on the race for the White House currently underway. “That doesn’t necessarily mean immigration, it could, but it could also mean vocational training.”
Other areas of focus will need to include investing in infrastructure, addressing the growth of the national debt, and state and federal regulatory reform, he said.
Kaplan’s remarks on the campaign, though guarded, were unusual in that Fed officials typically avoid making any comments on politics for fear of having their own independence infringed upon by politicians.
During the financial crisis and its aftermath the Fed used low rates to fight a war against recession and deflation, he said, but now even with very low interest rates the economy is set to grow only 1.75 percent to 2 percent this year. “Now we are in a period where the war now is, we got to grow,” he said.