WASHINGTON — Morgan Stanley is crediting President Joe Biden’s economic policies with driving an unexpected surge in the U.S. economy that is so significant that the bank was forced to make a “sizable upward revision” to its estimates for U.S. gross domestic product.
Biden’s Infrastructure Investment and Jobs Act is “driving a boom in large-scale infrastructure,” wrote Ellen Zentner, chief U.S. economist for Morgan Stanley, in a research note released Thursday. In addition to infrastructure, “manufacturing construction has shown broad strength,” she wrote.
As a result of these unexpected swells, Morgan Stanley now projects 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 is growing much stronger than we had anticipated, putting a more comfortable cushion under our long-held soft landing view,” Zentner wrote.
The analysts also doubled their original estimate for GDP growth in the fourth quarter, to 1.3% from 0.6%. Looking into next year, they raised their forecast for real 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.
Morgan Stanley’s revision came at a pivotal time for the Biden White House. The president has 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 by 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,” a phrase originally used by Republicans to jab the president, who co-opted the term as a badge of honor.
In addition to his legacy, Biden has also staked his 2024 reelection bid on Bidenomics, betting that strong economic growth and a campaign built around kitchen table issues will ultimately drown out Republicans’ culture war outrage.
This could be a risky wager, however. 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. Only 20% of Americans agreed that the economy was excellent or good, while a whopping 79% said it was just fair or poor, CNBC’s poll found.
Republicans have seized on voters’ economic pessimism to argue that Biden is ignoring everyday Americans’ ongoing challenges with high interest rates and inflation that has fallen some, 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-high inflation, high gas prices, lower paychecks and crippling uncertainty that leaves America worse off.”
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 long said: 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 is spurring investments in manufacturing and infrastructure that are creating jobs and supporting workers.”