Research has indicated that a majority of economic experts and thought leaders believe that the post-COVID era will be similar to the 1920s decade, also called the Roaring ’20s. The widespread availability of the COVID-19 vaccine leading to eased social distancing restrictions will once again encourage partying and social interactions, similar to that witnessed during the post-Spanish flu era. Technological innovations, a rise in xenophobia, inequality in access to high-speed internet, an increase in the global GDP, and an increase in corporate earnings will characterize the next decade, similar to the trends witnessed in the 1920s. On the other hand, some economists and experts believe that the global economic slowdown due to the COVID-19 pandemic will be prolonged and uneven in the next decade, making the 2020s markedly different from the 1920s. Conflicting theories and statements from experts belonging to both camps are briefly presented below. As mentioned above, more proponents belong to the first camp than the second camp.
Experts Who Believe That the Post-COVID Era Will be Similar to the Roaring ’20s Era
- According to Rayan Rafay, member of the Forbes Real Estate Council and COO/CFO at Fraction, “there are enough indicators to suggest that a similar path” to the Roaring ’20s is possible for the next decade. The positive indicators are in the form of technological innovation in the form of a digital economy, cloud computing, open-source libraries, 3D printing, and SaaS subscription models in various sectors. The negative indicators are in the form of rising xenophobia in the world through the election of populist governments in several countries, similar to what was seen in the 1920s, and inequality in access to high-speed internet, which resembles the inequality in access to electricity during the 1920s.
- With several COVID-19 vaccines showing positive results leading to speculation that the pandemic will come to an end in 2021, analysts at Morgan Stanley have found several similarities with the post-pandemic period of the 1920s, in which youngsters partied and economies boomed due to investments by millions of new investors in stock markets. In the ‘2021 Investor Strategy Outlook,’ Morgan Stanley analysts have predicted that the “V-shaped recovery that began in May 2020” will lead to global GDP growth of 6.4% in 2021 and an increase in corporate earnings by 25-30%.
- Edward Yardeni, President of Yardeni Research, Inc., shares a similar sentiment. In an interview with CNBC, he stated that with the possibility of easing of social distancing restrictions due to easy access to COVID-19 vaccines in 2021 and beyond and the progress in several sectors like industrial, energy, financial, materials, and technology as seen in the Dow Jones index, the “U.S. economy could see another ‘roaring twenties’ after the COVID-19 pandemic.”
- Yascha Mounk, leading political scientist and “Associate Professor of the Practice of International Affairs at Johns Hopkins University,” believes that the aftermath of the COVID-19 pandemic will be similar to that of the post-Spanish flu pandemic. Even after the Spanish flu killed more than 50 million people worldwide, the Roaring ’20s witnessed increased sociability among people in the form of parties and concerts. According to Mr. Mounk, “Five or 10 years from now, there will be about as many mass gatherings as there were before the coronavirus. Because we’re human.”
- Doug Beaudoin, vice chairman of the US Life Sciences & Health Care division of Deloitte LLP, is of the opinion that there are similarities between the innovations of the Roaring ’20s era and the current era that will lead to a post-COVID world. The post-Spanish flu era witnessed innovations like radio, the first one-way police radio dispatch, the first employer-sponsored health insurance, insulin, the first adhesive bandages, diphtheria and smallpox vaccines, vitamins, and the rise of consumerism. Synonymously, the post-COVID era will witness innovations like 5G, interoperable and value-based healthcare, cell and gene therapy, home medical devices, and the wellness movement.
- In a report titled ‘The Age of Disorder,’ Deutsche Bank research strategist Jim Reid and his team have written that the decade after 2020 will witness rapid economic growth similar to the 1920s. The team came to this conclusion after studying global asset prices in 2020. According to Mr. Reid, the themes that will define the post-COVID era will include “a battle for supremacy between the world’s top two economies; Europe’s make-or-break decisions on further integration; central banks underwriting ever-higher debt; a possible return of inflation; the fourth industrial revolution in technology and its challenge to workplaces in mega-cities; rising inequality within and between generations and related voter backlashes in favor of higher taxes; and climate protection.”
Experts Who Believe That the Post-COVID Era Will be Different From the Roaring ’20s Era
- Economist Nouriel Roubini has predicted a bleak post-COVID era, which is markedly different from the economic boom witnessed in the Roaring ’20s era. Prof. Roubini has warned that any global economic recovery after the COVID-19 pandemic will be anemic and will be in the shape of a ‘U’ or an ‘L.’ “A U-shaped recovery means that growth will fall and bottom out, and then pick up only after a prolonged period of slow or no growth. An L-shaped recovery is even more drastic — falling sharply and staying there for an extended period of time.” The economic slowdown will be due to the number of jobs lost owing to the COVID-19 pandemic.
- The report titled ‘World Economic Outlook 2020: A Long and Difficult Ascent,’ by the International Monetary Fund (IMF) predicts a long and uneven journey for the global economy to recover from the negative effects of the COVID-19 pandemic. The report reveals that “foreign direct investment (FDI) flows as a share of global gross domestic product (GDP) are well below their pre-pandemic levels, and are expected to remain as such” for the considerable part of the next decade.
- According to Dr. Shane Oliver, head of investment strategy and chief economist at AMP Capital, the post-COVID world will be different from the Roaring ’20s era. Whereas the 1920s was characterized by a massive boom in the global economy and mass consumerism, the current period leading up to a post-COVID world has been characterized by a lack of growth for years. Also, while the period leading up to the Great Depression of 1929 was marked by “monetary and fiscal tightening in various countries across the world,” the current period has witnessed opposite trends in the form of monetary easing and massive fiscal stimulus.