U.S. President Joe Biden gives a thumbs-up to First Lady Jill Biden on her way to Marine One on the South Lawn of the White House on July 14, 2023 in Washington, DC.
Drew Anger | Getty Images
Washington — Morgan Stanley President Joe Biden’s economic policies are being credited with unexpected growth in the U.S. economy so significant that the bank was forced to make a “massive upward revision” to its estimates of U.S. gross domestic product.
Biden’s Infrastructure Investment and Jobs Act “Mass infrastructure is accelerating,” Alan Zenter, chief U.S. economist at Morgan Stanley, wrote in a research note issued Thursday. In addition to infrastructure, “manufacturing construction has shown broad strength,” he wrote.
As a result of these unexpected increases, Morgan Stanley is now estimating 1.9% GDP growth for the first half of this year. This is almost four times higher than the bank’s previous forecast of 0.5%.
“The economy has been stronger than we expected in the first half of the year, putting a more comfortable cushion under our long-held soft landing outlook,” Zentner wrote.
Analysts raised their original estimate for fourth-quarter GDP growth to 1.3 percent from 0.6 percent. 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 industrial strength in America,” Zenner wrote.
The Morgan Stanley review comes at a critical time for the Biden White House. The president has spent the summer touring the country touting his economic achievements. “Together we are transforming the country, not just through jobs, not just through manufacturing, but through rebuilding our infrastructure,” Biden said Thursday during a visit to a Philadelphia shipyard.
The White House has dubbed this brick-and-mortar economic growth formula “Bidenomics,” originally used by Republicans to bash the president, who chose the term as a badge of honor.
In addition to his own legacy, Biden has also staked his 2024 re-election bid on bidonomics, betting that a campaign built around strong economic growth and kitchen-table issues will eventually quell Republicans’ culture war fury.
However, this can be a risky gamble. The latest CNBC All-America Economic Survey, released Thursday, found that only 37 percent of respondents approved of Biden’s handling of the economy, while 58 percent disapproved. Just 20 percent of Americans agreed the economy was excellent or good, while 79 percent said it was only fair or poor, the CNBC poll found.
Republicans have pointed to voters’ economic frustration, arguing that Biden is ignoring the everyday challenges Americans face with high interest rates and inflation that has eased somewhat, but still sits 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’s an economic disaster where government causes decades of high inflation, high gas prices, low wages and uncertainty that make America worse off.”
With 16 months to go before Americans vote for president, Biden’s political fortunes, for now, 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 bidonomics in action,” White House Assistant Press Secretary Mike Kikukawa said in an email to CNBC.
“The president’s economic agenda is promoting investments in manufacturing and infrastructure that are creating jobs and supporting workers.”
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Source by [CNBC News]
