President Biden traveled to New York on Thursday to tout another major manufacturing investment, this time from IBM, as a sign of confidence among business leaders in the U.S. economy.
Amid concerns about gas prices, broader inflation and rising interest rates, Biden on Thursday sought to focus on a particular bright spot for the administration: Recent investments by major tech companies spurred by federal legislation to support semiconductor manufacturing and shore up the domestic supply chain.
Biden was in Poughkeepsie, N.Y., on Thursday to celebrate a planned $20 billion investment from IBM over the next decade to boost research and development initiatives and semiconductor manufacturing.
The IBM announcement came on the heels of Micron, a semiconductor manufacturer, unveiling plans to spend $100 billion on a new facility near Syracuse, N.Y. Micron previously announced a major investment in its Boise, Idaho, campus.
And Biden visited Ohio last month to highlight a groundbreaking for a new Intel facility.
“As we saw during the pandemic, when factories that make these chips shut down around the world, the global economy literally comes to a screeching halt,” Biden said Thursday.
“More Americans have learned the phrase ‘supply chain,’” he added. “Well guess what. The supply chain is going to start here and end here, in the United States.”
Those investments aim to restore microchip manufacturing to the U.S. over the next decade after companies outsourced production to Asian countries. Biden noted that car prices skyrocketed in recent years due to a shortage of chips, which are also used in smartphones, appliances and weapon systems.
The IBM announcement is the latest economic win for the White House since the passage of the CHIPS and Science Act, which passed with bipartisan support and included more than $50 billion in incentives for manufacturers to build domestic semiconductor plants. It also included more than $80 billion for the National Science Foundation to support innovation and research.
Still, the White House is grappling with shorter-term economic headwinds and policy decisions that are largely out of its control.
The Federal Reserve, an independent body, is sticking with its plan to raise interest rates in an effort to bring prices down, despite warnings from Biden administration officials and lawmakers that continued fiscal tightening could ravage the economy.
In her first public remarks since being confirmed to the board, Federal Reserve Governor Lisa Cook said Thursday that getting inflation under control “will require ongoing rate hikes and then keeping policy restrictive for some time.”
Treasury Secretary Janet Yellen said Thursday that interest rate hikes are taking a toll on the global economy, particularly among poorer nations that may now struggle to pay their debts.
“Policymakers in the major economies must continue implementing policies to rein in high inflation while remaining attentive to global repercussions,” Yellen said at a Center for Global Development event.
Her comments come after the United Nations Conference on Trade and Development this week urged the Federal Reserve and other central banks to reverse course on aggressive rate hikes, warning that they could cause a global recession.
The International Monetary Fund said Thursday that the global economy will lose out on roughly $4 trillion in growth through 2026 and predicted that “things are more likely to get worse before it gets better.” The World Trade Organization on Wednesday estimated that global trade will only grow by 1 percent next year, down from its 3.4 percent prediction in April.
Higher interest rates are already beginning to slow hiring in the U.S. The number of job openings fell by 1.1 million from July to August, according to Labor Department data released Tuesday, giving economists some hope that the nation’s labor shortage will ease but prompting concerns about a larger slowdown.
Meanwhile, OPEC+ this week announced that it would cut global oil production by 2 million barrels a day in anticipation of lower demand, a move that will likely increase prices at the pump soon.
Before departing for New York, Biden told reporters he was disappointed in the decision by the oil-exporting coalition, which includes Saudi Arabia and Russia, and indicated the White House was exploring alternatives to try and stabilize gas prices.
“There’s a lot of alternatives. We haven’t made up our mind yet,” Biden said.
Brian Deese, head of the National Economic Council, said one focus would be on pushing oil refiners to bring down the retail price of gasoline to more in line with historical trends when compared with the wholesale cost.
The administration will be closely eyeing a few key economic indicators in the coming weeks. Unemployment numbers from September will be released on Friday, with last month’s inflation data coming the week after.
When asked about the broader economic trajectory of the country, Deese told reporters the White House is trying to balance both short-term concerns about the economy and long-term efforts to transition the U.S. economy after the peak of the coronavirus pandemic into a sustainable, stable place.
“Even as we focus on the important near-term issues, like dealing with refineries to try to keep the progress in gas prices coming down to sustain it, we are very focused on the long-term economic strategy that this president has had since taking office,” Deese told reporters. “And one of the key hallmarks of that is how do we build a more resilient economy.”