Three conditions for the 2020s to be another Roaring Twenties – Natixis

Some believe that the COVID crisis is going to give way to another Roaring Twenties period in OECD countries, with the same characteristics as in the 1920s. According to analysts at Natixis, there will be a strong economic recovery in the OECD after the crisis but it is not at all certain that it will become another Roaring Twenties.

Key quotes

“There must be a consumption boom, fuelled by the desire to offset the crisis years. Such a boom is possible, as households have accumulated large forced savings during the crisis. But one obstacle may be concern about the future and precautionary savings among households out of fear there will be other crises, as well as heterogeneity among households and job losses as production fails to normalise in all economic sectors.”

“There is already euphoria in financial markets, which, in addition to the prospect of economic recovery, is primarily a result of the ultra-expansionary monetary policies.”

“We see that the COVID-19 crisis is leading to increased digitisation of the economy. But this does not mean that there will be rapid growth in productivity and employment. The development of new technologies has not come hand in hand with faster productivity gains; this is because the level of employment in the production of new technologies remains quite low, while their growth has given rise to many low-skilled jobs.”