According to a research note by Morgan Stanley’s chief U.S. economist, Ellen Zentner, the U.S. economy is currently benefiting from a surge in large-scale infrastructure projects and a rebound in domestic business investment, particularly in the manufacturing sector.
President Joe Biden’s Infrastructure Investment and Jobs Act has had a significant impact on the domestic economy, driving substantial growth in infrastructure development and fostering strength in manufacturing construction. As a result, Morgan Stanley has revised its GDP growth forecast for the first half of this year to 1.9%, which is four times higher than its initial projection of 0.5% for the first half of 2023.
The signing of the Infrastructure spending bill in 2021 was a notable accomplishment for President Biden, especially considering his slim majority in Congress. This legislation was followed by the Inflation Reduction Act, which focused on climate change and healthcare spending. Both laws include incentives that prioritize domestic manufacturing and require U.S. companies to hire locally, even if it means foregoing cheaper imported goods.
As a result of these economic developments, Morgan Stanley analysts have also raised their forecast for GDP growth in the fourth quarter to 1.3% from the previous estimate of 0.6%. Additionally, they have slightly increased their GDP forecast for 2024 to 1.4%.
Zentner emphasizes that these numbers reflect the ongoing strength of U.S. industries and highlight the positive narrative surrounding industrial growth in the country.
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Bidenomics and the Perception of Economic Recovery
The White House has embraced the term “Bidenomics” as a way to highlight the progress of the U.S. economy. Initially used as a criticism by Republicans, the Biden team has reappropriated the phrase to showcase economic growth during recent road appearances. However, despite Morgan Stanley’s positive forecasts, the sentiment among Americans remains divided.
Mixed Polling Results
According to a recent Monmouth University poll, only three in 10 Americans believe that the country is recovering economically in comparison to the rest of the world since the COVID-19 pandemic. Additionally, opinions on President Biden’s handling of jobs and unemployment are split, with 47% approving and 48% disapproving.
The CNBC All-America Economic Survey released on Thursday revealed that only 37% of respondents approved of President Biden’s economic policies. In contrast, 58% expressed dissatisfaction. The survey also found that only 20% of Americans viewed the economy as excellent or good, while a significant 79% considered it fair or poor.
Main Street Concerns
For Republicans eyeing the 2024 elections, the opinions on Wall Street forecasts hold less significance than those of Main Street. Their focus lies on understanding the concerns and sentiments of everyday Americans.
According to Republican House Speaker Kevin McCarthy, “Bidenomics” represents blind faith in government spending and regulation. He believes it has resulted in increasing inflation, higher gas prices, reduced paychecks, and overall uncertainty that has left America worse off economically.
While the White House continues to tout the positive aspects of “Bidenomics,” it is crucial to address and alleviate the lingering concerns surrounding the economy felt by many Americans.
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