US President Joe Biden gives a thumbs up as he walks with first lady Jill Biden on Marine One on the South Lawn of the White House on July 14, 2023 in Washington, DC.
Drew Anger | Getty Images
WASHINGTON — Morgan Stanley is crediting President Joe Biden’s economic policies for causing an unexpected surge in the US economy so significant that the bank was forced to make a “substantial upward revision” to its estimates for US gross domestic product.
to Biden Infrastructure Investment and Jobs Act is “driving a boom in large-scale infrastructure,” wrote Ellen Zentner, chief US economist for Morgan Stanley, in a research note released Thursday. In addition to infrastructure, “manufacturing construction showed broad strength,” he wrote.
As a result of these unexpected inflations, Morgan Stanley is now projecting 1.9% GDP growth for the first half of this year. That’s nearly four times higher than the bank’s previous forecast of 0.5%.
“The economy in the first half of the year grew stronger than we expected, putting a more comfortable cushion under our long-held soft landing view,” Zentner wrote.
Analysts also doubled their original estimate for GDP growth in the fourth quarter, to 1.3% from 0.6%. Looking ahead to next year, they raised their forecast for real GDP in 2024 by a tenth of a percentage point, to 1.4%.
“The narrative behind the numbers tells the story of the strength of the US industry,” Zentner wrote.
Morgan Stanley’s change comes at an important time for the Biden White House. The president spent the summer crisscrossing the country, touting his economic achievements. “Together we are transforming the country, not just through jobs, not just through manufacturing, but also rebuilding our infrastructure,” Biden said Thursday during a visit to a shipyard in Philadelphia.
The White House called the brick-and-mortar economic growth formula “Bidenomics,” a phrase originally used by Republicans to chide the president, who co-opted the term as a badge of honor.
In addition to his legacy, Biden has also staked his 2024 re-election bid on Bidenomics, betting that strong economic growth and a campaign built on kitchen table issues will finally drown out Republicans’ anger at the culture war.
It may be a risky bet, however. The latest CNBC All-America Economic Survey, released Thursday, found that only 37% of respondents approved of Biden’s handling of the economy, while 58% disapproved. Only 20% of Americans agree that the economy is good or good, while a whopping 79% say it is only fair or poor, the CNBC poll found.
Republicans have seized on voters’ economic pessimism to argue that Biden is ignoring the daily challenges Americans face with high interest rates and inflation that has fallen in some, but still remains above pre-pandemic levels.
“Bidenomics is about blind faith in government spending and regulation,” GOP House Speaker Kevin McCarthy said in a statement Friday. “This is an economic disaster in which the government is causing decades-high inflation, high gas prices, lower wages and crippling uncertainty that is leaving America.”
With 16 months to go before Americans cast their ballots for president, Biden’s political fortunes, for the moment, appear to be improving along with the economy.
“This report confirms what we’ve said for a long time: Our strong and resilient economy is Bidenomics in action,” White House assistant press secretary Mike Kikukawa said in an email to CNBC.
“The president’s economic agenda stimulates investments in manufacturing and infrastructure that create jobs and support workers.”