Report
Patrick Artus

Is the “Roaring Twenties” theory plausible?

It has been argued that the COVID crisis is going to give way to a period like the “Roaring Twenties” following the First World War. Is this possible? It would require: A consumption boom, fuelled by the desire to offset the crisis years , and therefore the consumption of accumulated savings; Euphoria in financial markets, fuelling wealth effects; Technological progress, with new products (in the 1920s: cars and household appliances), not only fuelling consumption but also boosting productivity and potential growth. There will probably be euphoria in financial markets, thanks to the highly expansionary monetary policies. For the time being, there is more desire to save than to consume. To be sure, the COVID crisis will lead to further digitisation of the economy, but will this come hand in hand with productivity gains? This has not been the case for 20 years, during which time digitalisation has led to the creation of many low-skilled jobs instead (employees of platforms, etc.) . There is also reason to fear a long period of weak corporate investment.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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