Veteran market strategist Ed Yardeni thinks the US economy might be about to relive the “roaring ’20s”.
The Yardeni Research president said during an episode of Bloomberg’s “Merryn Talks Money” podcast released Friday that he’s expecting a combination of loose post-pandemic monetary policy and rapid technological change to drive growth higher over the next decade.
“It must have been pretty depressing to think about the outlook for the 1920s at the beginning of the decade,” he said, referring to the recent end of the First World War, the Spanish flu pandemic, and the recession that hit the economy in 1923.
“And yet it turned out to be the roaring 1920s because of technological innovations, things as high-tech as plumbing, auto-manufacturing adapted more efficient ways of producing things, and as a result of that we had a tremendous productivity boom.”
Fast-forward to today and there are comparisons to be drawn, according to Yardeni.
“There are similarities. We’ve had a pandemic. I think we’ve got a technology revolution that started in the 1990s… every company is a technology company. You either make it or you use it. If you don’t use it, you’re going to lose it, you’re going to go out of business,” he told Bloomberg.
“Put that all together and I think we’re in the early stages of a productivity growth boom, and I think the data is already there to show that it’s happening,” he added.
Yardeni’s cheery outlook comes just a day after data from the Bureau of Economic Analysis showed that the US’s Gross Domestic Product (GDP) expanded by a better-than-expected 3.3% over the final quarter of 2023. The benchmark S&P 500 stock-market index is also trading at all-time highs.
His views echo those of the Swiss bank UBS, which said in November that better-than-expected growth numbers from last year would set the stage for a “new macro regime” that could bring about a “roaring ’20s outcome” for the US economy.