At least one major investment bank has bought into Bidenomics.
President Joe Biden’s Infrastructure Investment and Jobs Act has seeped into the domestic economy, “driving a boom in large-scale infrastructure,” wrote Ellen Zentner, chief U.S. economist for Morgan Stanley, in a research note out late last week. Plus, she wrote, “manufacturing construction has shown broad strength.”
As a result Morgan Stanley now projects 1.9% economic expansion in the first half of this year. That’s nearly four times the bank’s previous 0.5% forecast for growth in gross domestic product in the first half of 2023.
Infrastructure spending signed into law in 2021 marked an early legislative win for a president handed only a slim majority in Congress upon his election over then-incumbent Republican Donald Trump in November 2020. It was followed up by another legislative banner for the incumbent: the Inflation Reduction Act, a climate-change- and healthcare-focused spending bill signed into law about a year ago. Many of the incentives in the laws are tied to domestic manufacturing and require U.S. hiring, sometimes at the expense of less-expensive or readily available goods from abroad.
As a result of these economic lifts, the Morgan Stanley MS, +0.70% analysts more than doubled their original estimate for GDP growth in the fourth quarter, to 1.3% from 0.6%. And they nudged up their forecast for 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 the U.S,” Zentner wrote.