U.S. President Joe Biden gives a thumbs up as he and first lady Jill Biden walk to Marine One on the South Lawn of the White House on July 14, 2023 in Washington, DC.
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USA – Morgan Stanley is crediting President Joe Biden’s economic policies for spurring a spike in the US economy, which was so significant that the bank was forced to make a “significant upward adjustment” to its estimate of US gross domestic product.
Biden’s Infrastructure Investment and Jobs Act is “driving a massive infrastructure boom,” Ellen Zentner, chief US economist at Morgan Stanley, wrote in a research note released Thursday. Beyond infrastructure, “construction manufacturing has shown immense strength,” she wrote.
As a result of these unexpected price spikes, Morgan Stanley now forecasts 1.9% GDP growth in the first half of this year. This is nearly four times higher than the bank’s previous forecast of 0.5%.
“The economy in the first half is growing much stronger than we anticipated, providing a more comfortable cushion for our longstanding soft landing view,” Zentner wrote.
Analysts also doubled their initial estimate of GDP growth in the fourth quarter, from 0.6% to 1.3%. Looking ahead to next year, they raised their forecast for real GDP in 2024 by 1/10 percent, to 1.4%.
“The story behind the numbers tells the story of industrial power in America,” wrote Zentner.
Morgan Stanley’s revision comes at a pivotal time for Biden’s White House. The president spent the summer traveling across the country, tout your economic achievements. “Together, we are transforming the country, not just through jobs, not just through manufacturing, but also by rebuilding our infrastructure,” Biden said Thursday during a visit to a shipyard in Philadelphia.
The White House has dubbed this traditional economic growth formula “Bidenomics,” a phrase originally used by Republicans to poke fun at the president, who agreed to adopt the term as a badge of honor.
In addition to his legacy, Biden has also bet on his 2024 re-election for the Bidenomics, betting that strong economic growth and a campaign built around issues on the kitchen table will eventually drown out the outrage in the Republican Party’s culture wars.
However, this can be a risky bet. CNBC’s latest nationwide economic survey, released on Thursday, found that only 37% of respondents approved of Biden’s handling of the economy, while 58% disapproved. Just 20% of Americans agree the economy is excellent or good, while a whopping 79% think the economy is decent or poor, the CNBC poll found.
Republicans have taken advantage of voters’ economic pessimism to argue that Biden is ignoring the daily challenges of Americans with high interest rates and inflation easing slightly, but still above pre-pandemic levels.
“Bidenomics is about blind faith in government spending and regulation,” GOP House Speaker Kevin McCarthy said in a statement Friday. “It was an economic disaster as the government caused decades-high inflation, high gas prices, lower wages, and crippling uncertainty that made America worse.”
With 16 months to go before Americans vote for president, Biden’s political fortunes are now improving along with the economy.
“This report confirms what we have been saying for a long time: Our strong and resilient economy is the Bidenomics that is working,” White House assistant press secretary Mike Kikukawa said in an email to CNBC.
“The president’s economic agenda is driving investment in manufacturing and infrastructure that is creating jobs and supporting workers.”
