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Morgan Stanley Credits Biden's Economic Policies for Unexpected Surge in US Economy
Infrastructure Investment and Jobs Act Driving Boom in Large-Scale Infrastructure
Morgan Stanley is crediting President Joe Biden's economic policies with driving an unexpected surge in the U.S. economy. 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," according to Ellen Zentner, chief U.S. economist for Morgan Stanley. Additionally, manufacturing construction has shown broad strength. These unexpected swells have led Morgan Stanley to project 1.9% GDP growth for the first half of this year, which is nearly four times higher than the bank's previous forecast of 0.5%. Zentner wrote, "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."
Analysts Double Their GDP Growth Estimate and Highlight Industrial Strength
Morgan Stanley analysts also doubled their original estimate for GDP growth in the fourth quarter, raising it 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%. Zentner emphasized that "the narrative behind the numbers tells the story of industrial strength in the U.S." This revision from Morgan Stanley comes at a pivotal time for the Biden White House as the president has been touting his economic achievements and promoting his "Bidenomics" agenda.
Bidenomics and his 2024 Reelection Bid
The White House has dubbed this economic growth formula "Bidenomics," which is a term originally used by Republicans to criticize the president. However, Biden has co-opted the term as a badge of honor and has staked his 2024 reelection bid on Bidenomics. He is betting that strong economic growth and a campaign built around kitchen table issues will drown out Republicans' culture war outrage. While this strategy could be risky, Biden's political fortunes seem to be improving along with the economy for now.
Economic Pessimism and Republican Criticism of Bidenomics
Despite the positive economic indicators, a recent CNBC All-America Economic Survey found that only 37% of respondents approved of Biden's handling of the economy, while 58% disapproved. Furthermore, only 20% of Americans considered the economy to be excellent or good, with 79% describing it as fair or poor. Republicans have seized on this economic pessimism to argue that Biden is ignoring everyday Americans' ongoing challenges with high interest rates and inflation. GOP House Speaker Kevin McCarthy called Bidenomics an "economic disaster."
White House Response and Conclusion
The White House, on the other hand, sees the positive economic report as evidence of the success of Biden's economic agenda. White House assistant press secretary Mike Kikukawa said, "Our strong and resilient economy is Bidenomics in action. The president's economic agenda is spurring investments in manufacturing and infrastructure that are creating jobs and supporting workers." With 16 months until the next presidential election, Biden's political future seems to be closely tied to the state of the economy.
Hot Take: Impact on New Businesses
The unexpected surge in the US economy credited to President Biden's economic policies, particularly the Infrastructure Investment and Jobs Act, may have significant implications for new businesses.
1. Increased Opportunities: The boom in large-scale infrastructure and emphasis on manufacturing construction present new business opportunities. The flow of funding into infrastructure projects can create a demand for goods and services related to construction, transportation, energy, and technology. New businesses in these sectors could benefit from the increased investment.
2. Job Creation: The focus on infrastructure development is expected to generate numerous job opportunities. This can be beneficial for new businesses that are looking to expand their workforce or enter into industries experiencing growth. They can tap into the job market and attract skilled workers, potentially helping them scale and thrive.
3. Market Expansion: The economic surge can lead to a rise in consumer spending, creating a larger market for products and services. New businesses that align with the needs and preferences of the expanding consumer base can experience accelerated growth and increased sales. They may also have the advantage of entering a market that is primed for growth.
4. Policy Stability: The Biden administration's economic policies and commitment to infrastructure investment provide a sense of stability and predictability. This can create a favorable environment for new businesses, as they can make long-term plans and investments with confidence in ongoing government support.
While there are still concerns and criticisms surrounding the economy, the positive impact of Biden's economic policies opens up potential avenues for new businesses to thrive in a period of growth. Entrepreneurs and innovators should closely monitor market trends and align their ventures with the evolving needs of a resurging economy.
Article First Published at: https://www.cnbc.com/2023/07/21/bidenomics-spurred-stronger-gdp-growth-morgan-stanley.html