The United States must make it easier to encourage legal immigration if it wishes to see the economy grow, JPMorgan strategist David Kelly told CNBC on Friday.
“We have a labor force problem,” Kelly said on “Squawk on the Street.” “That’s part of what’s slowing the labor side of the economy down. We just don’t have enough people available and ready to work. So we need to make sure we have strong growth in legal immigration to help our labor force grow.”
Growth in immigration likely won’t happen anytime soon. After a crackdown on illegal immigration, President Donald Trump last month supported legislation by Republican senators to cut legal immigration by more than 50 percent over 10 years.
But some economists say such a bill could actually hurt Trump’s plan to grow the U.S. economy.
As early as Friday, Trump also may rescind the Obama administration’s “dreamer” policy, which protects from deportation nearly 800,000 immigrants who entered the country illegally as children.
According to a closely watched government report Friday, the U.S. economy created 156,000 jobs in August, less than the 180,000 expected by economist surveyed by Reuters. In addition, the latest report revised downward the totals for new jobs for June and July.
Kelly said the report shows the economy is “stuck in second gear” in some places, such as the labor market, but he thinks the economy is doing well in other areas.
He also said investors will get some sort of tax cut by the Trump administration this year. The promise of business-friendly legislation by Trump is partly responsible for the stock market’s rise since the election, some analysts say.
Kelly said the Federal Reserve will likely hike interest rates in December.
But Wells Fargo Securities economist John Silvia said on the show that the destruction caused by Hurricane Harvey could put any Fed rate hike this year on hold. The Fed has already raised rates twice in 2017.
“It really looks more and more given Harvey, less and less of a chance of a Fed move in December,” Silvia said.
Regardless, the central bank is still expected to begin reducing its $4.5 trillion balance sheet this year.
Growth in legal immigration needed to help labor force, JPMorgan strategist says