Bidenomics

By slim margins, bipartisan legislation passed in the first two years of President Joe Biden’s term has begun to show signs of success. Targeting infrastructure, green energy and job creation for middle income workers, economists are attributing recent GDP trends, in part, to the Infrastructure Investment and Jobs Act signed November 25, 2021, the CHIPS and Science Act signed August 9, 2022, and the Inflation Reduction Act signed August 16, 2022.

Recently released Commerce Department data reported spending on manufacturing facilities up nearly 80 percent over figures for 2022. Morgan Stanley economists also reported “a boom in large-scale infrastructure and rebounding business investment in manufacturing.” Those economists have revised their forecasts for U.S. GDP growth upward for 2023 and 2024, “partly as a result of strong business investment in structures, as well as fiscal policy tailwinds linked to the CHIPS Act and the Inflation Reduction Act.”

Some observers argue that the boom is not only the result of the Biden administration’s policy, contending that the boom began as the country emerged from the pandemic. However, economists suggest that such an increase in business activity would not be normal “at a time when higher borrowing costs and tighter lending standards have curtailed other investments.” In fact, when Tesla announced a $770 million expansion of its Gigafactory in Austin, Texas, it issued a statement saying, “The focus of Tesla’s cell production is currently in the United States due to the framework created by the United States Inflation Reduction Act.” Other construction recently attributed to Federal funding include an electric school bus plant in High Point, North Carolina, and improvements to Spokane International Airport in Washington state.

The three major pieces of legislation passed in 2021 and 2022 were originally labeled “Bidenomics” as a slur by Republicans critical of the president’s economic plan. As successes accrue, President Biden has adopted the label with pride. Republicans in several states are happy to carry the successes back to their constituents even though they voted against the legislation.