President Biden’s first three years in office will be remembered for many things—massive spending is one of them.

In year one of Biden’s administration, Congress passed the Infrastructure Investment and Jobs Act (IIJA) worth $1.2 trillion. In the second year, Biden approved the CHIPS and Science Act—providing $280 billion in funding for the semiconductor industry.

The president then signed the $737 billion Inflation Reduction Act (IRA), dubbed the largest clean energy initiative in American history.

In all, Biden has committed over $2 trillion in new spending in his first 20 months in office. That’s on top of existing government programs that cost trillions of dollars.

Many Americans are now wondering if all that spending is worth it.

Why is Biden spending so much?

America’s infrastructure is falling apart. Experts say the country is losing the semiconductor battle to China. And the world is facing a climate crisis that needs immediate action.

Fixing these problems is not only a moral obligation; it could create hundreds of thousands of new jobs and billions of dollars in spin-off benefits.

At least, that’s how the Biden administration has sold these new programs to the American people.

Early signs seem to suggest that Biden’s spending boom is having a positive impact on the economy.

According to the Census Bureau, manufacturing construction is on the rise—especially in states like Utah, Colorado, and New Mexico.

Meanwhile, new jobs have helped keep the labor market afloat. Unemployment is currently at 3.8%, not far off 50-year lows. Manufacturing employment is the highest it has been since 2008.

There’s evidence that increased government spending has also ignited an industrial boom in the private sector.

According to government data, real private-sector spending on manufacturing and industrial construction is approaching $200 billion annually—the highest level in nearly 60 years:

Bidenomics speding chart

Before Biden took office, that number was less than $100 billion and peaked at around $135 billion under Trump.

Clearly, Biden’s spending spree is having at least some positive effect on the economy. And if you believe America has a moral imperative to bring factory jobs back home, these programs are a step in that direction.

If that’s the case, why are so many Americans unhappy with the state of the economy? And why is Biden’s approval rating in the gutter?

Manufacturing boom—or manufactured nonsense?

Politics divides America like a hot knife on Thanksgiving.

That’s why every budget proposal tabled before Congress sparks controversy no matter who authors it.

Today, Republicans are accusing the Biden administration of reckless deficit spending and pursuing programs that don’t put America first.

But if you look back far enough, you see that it’s not just a Biden problem—U.S. government spending has exploded since 1980. Democrat. Republican. It doesn’t matter—the same accusations are lobbed from either side.

Biden’s pledge to beef up domestic manufacturing may have rubbed the GOP the wrong way. After all, supporting factory jobs was a Trump promise that didn’t quite pan out.

Putting aside the GOP’s grudge, evidence for an all-out manufacturing boom isn’t so cut and dry when we look at one crucial indicator: PMI.

PMI stands for purchasing managers’ index. It’s a monthly indicator that tracks how domestic manufacturers are doing. It considers everything from hiring and work backlogs to new orders.

The Institute for Supply Management’s manufacturing PMI says the sector has been in recession for all of 2023.

Since peaking in March 2021, manufacturing PMI has been in freefall. The indicator says U.S. manufacturing is slumping at its weakest rate since the depths of Covid-19 lockdowns in May 2020.

There’s nothing fancy about PMI calculations, either. They’re based on first-hand discussions with manufacturing companies.

Surveys from the regional Fed banks of Philadelphia and New York also show manufacturing output is declining in major urban centers.

The Philadelphia Fed’s manufacturing survey was negative for 11 consecutive months—telling us that factory output in the mid-Atlantic region has been down all year.

The New York Fed survey fell this year to the lowest since 2009, a bad sign for business conditions in New York state.

Beyond the question marks surrounding manufacturing, history teaches us that massive deficit spending doesn’t age well. By spending big now, we risk the consequences of paying even more later through higher inflation and taxation.

But that’s a debate for another time.