U.S. President Joe Biden gives a thumbs up while walking with First Lady Jill Biden to Marine One on the south lawn of the White House on July 14, 2023 in Washington, DC.
Drew Angerer | Getty Images
Washington – Morgan Stanley The bank says President Joe Biden’s economic policies have led to an unexpected surge in the U.S. economy, so significant that the bank has been forced to “significantly raise” its estimates of U.S. gross domestic product (GDP).
Biden’s Infrastructure Investment and Employment Law “It’s driving the massive infrastructure boom,” Ellen Zentner, chief U.S. economist at Morgan Stanley, said in a research note released Thursday. In addition to infrastructure, “manufacturing construction also shows broad strengths,” she wrote.
As a result of this unexpected surge, Morgan Stanley is now forecasting 1.9% GDP growth in the first half of this year. That’s nearly four times higher than the bank’s previous forecast of 0.5%.
“The economy has grown much stronger than we expected in the first half of this year, adding a more comfortable cushion to our long-held prospect of a soft landing,” Zentner said.
Analysts also doubled their fourth-quarter GDP growth forecast to 1.3% from an initial forecast of 0.6%. Looking ahead to next year, it raised its 2024 real GDP forecast by a tenth to 1.4%.
“The story behind the numbers speaks to the strength of U.S. industry,” Zentner wrote.
Morgan Stanley’s revisions come at a pivotal time for President Biden. The president spent the summer flying around the country, advertise his financial achievements. “Together we are transforming this country, not just by jobs and manufacturing, but by rebuilding infrastructure,” Biden said Thursday during a visit to a Philadelphia shipyard.
The White House calls this brick-and-mortar economic growth equation “bidenomics,” a phrase originally used by Republicans to attack the president, who adopted it as a badge of honor.
In addition to his own achievements, Mr. Biden is betting his 2024 re-election on Bidennomics that a campaign built around strong economic growth and dining table issues will eventually drown out anger in the Republican culture war.
However, this can be a risky bet. Latest CNBC National Economic SurveyA poll released Thursday found that only 37% of people approve of Mr. Biden’s handling of the economy, while 58% disapprove. A CNBC poll found that while only 20% of Americans said the economy was good or good, a whopping 79% said it was just fair or bad.
Republicans have piggybacked on voter economic pessimism, arguing that Mr. Biden is ignoring the ongoing challenges of everyday Americans of high interest rates and inflation, which, although slightly lower, is still above pre-pandemic levels.
Republican House Speaker Kevin McCarthy said in a statement on Friday that “bidenomics is a blind faith in government spending and regulation.” “This is an economic disaster that has caused the government to unleash decades of high inflation, skyrocketing gas prices, declining salaries and catastrophic uncertainty that is worsening the American economy.”
With 16 months left for Americans to vote in the presidential election, so far Biden’s fortunes appear to be improving along with the economy.
“This report confirms what we’ve been saying for years: our strong and resilient economy is what Bidennomics does,” White House Assistant Press Secretary Mike Kikukawa said in an email to CNBC.
“The president’s economic policies are encouraging investments in manufacturing and infrastructure that create jobs and support workers.”