“The U.S. economy is enjoying ‘a boom in large-scale infrastructure [and] rebounding domestic business investment led by manufacturing.’”
— Morgan Stanley’s Zentner
At least one major investment bank has bought into Bidenomics.
President Joe Biden’s Infrastructure Investment and Jobs Act has seeped into the domestic economy, “driving a boom in large-scale infrastructure,” wrote Ellen Zentner, chief U.S. economist for Morgan Stanley, in a research note out late this week. Plus, she wrote, “manufacturing construction has shown broad strength.”
As a result Morgan Stanley now projects 1.9% gross domestic product (GDP) growth for the first half of this year. That’s some four times higher than the bank’s previous forecast for the first half of 2023 of 0.5%.
Infrastructure spending signed into law in 2021 marked an early legislative win for a president handed only a slim majority in Congress. It was followed up by another legislative banner for the incumbent: the Inflation Reduction Act, a climate change and healthcare-focused spending bill signed into law about a year ago. Much of the incentives in the laws are tied to domestic manufacturing and require U.S. hiring, sometimes at the expense of less-expensive or readily available goods from abroad.
As a result of these economic lifts, the Morgan Stanley
analysts also doubled their original estimate for GDP growth in the fourth quarter, to 1.3% from 0.6%. And they nudged up their forecast for GDP in 2024 by a tenth of a percent, to 1.4%.
“The narrative behind the numbers tells the story of industrial strength in the U.S,” Zentner wrote.
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The White House has run with the theme of U.S. brick-and-mortar economic growth in recent weeks, increasingly leveraged by the president and his acolytes as “Bidenomics.” It’s a phrase originally used by Republicans to take a shot at the president, who has been saddled with high inflation and rising interest rates in his first term.
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For now, the Biden team co-opted the term as a badge of honor as Biden has tried to tap into economic performance during recent road appearances. That included a speech to a union crowd at a shipyard in Philadelphia this past week.
Bidenomics and Morgan Stanley forecasts aside, wider polling shows that some Americans, likely feeling the lingering sting of inflation, aren’t yet convinced.
A Monmouth University poll released Wednesday showed only three in 10 Americans feel the country is doing a better job recovering economically than the rest of the world since the COVID-19 pandemic. Respondents were split on Biden’s handling of jobs and unemployment, with 47% approving and 48% disapproving of his performance.
The latest CNBC All-America Economic Survey, released Thursday, found that just 37% of respondents approved of Biden’s handling of the economy, while 58% disapproved. Some 20% of Americans agreed that the economy was excellent or good, while 79% said it was just fair or poor, CNBC’s poll found.
Republicans looking to challenge Biden and the Democrats in 2024 care less about Wall Street’s forecasts and more about Main Street’s polling, it would seem.
“Bidenomics is about blind faith in government spending and regulation,” Republican House Speaker Kevin McCarthy said in a statement Friday. “It’s an economic disaster where government causes decades-high inflation, high gas prices
lower paychecks and crippling uncertainty that leaves America worse off.”