Coming out of quarantine, we see the streets filled with people and hints that life is returning back to normal. What does this mean for the economy? Let’s ask Business Editor Jake Sonderman! — Editor-in-Chief Sara Habibipour
By Jake Sonderman, Business Editor
We are entering a new decade as the American people. We are just starting to come out of a deadly pandemic that has killed hundreds of thousands. We have been involved in military conflict around the globe in the previous decade but seem to be moving more towards isolationism with some calling for “America First.” But, on the bright side, consumer demand seems to be rising at a brisk pace and isn’t showing signs of slowing down. Only, the year isn’t 2021; it’s 1921!
The 1920s are a well known period of economic growth and consumerism. They saw the introduction of technologies like the radio, combustion engine, and refrigerator. America had just come out of the Spanish flu, which killed 675,000 Americans (there were 100 million Americans at the time) (biospace.com). The decade was also a period of isolationism and tariffs. Presidents and Representatives campaigned on the idea of “America First.” Congress enacted the Fordney-McCumber Act, which raised tariffs to 40% pretty much across the board (britannica.com). The Hawley-Smoot tariff was enacted just as the Great Depression hit, raising tariffs by another 20%, making a bad problem worse (Britannica). By today’s standards, this would be considered a “trade war” with Europe.
Some of this might sound familiar. We are again exiting out of a world-wide pandemic that has killed hundreds of thousands in America. Markets are reaching record highs monthly and consumer demand for things like cars and houses is through the roof. Under Trump, we entered a trade war with China, raising tariffs to nearly 20% for $350 billion in goods (cnn.com). That’s not quite the same as the 1920s tariffs, but we are certainly moving in that direction as Biden does not seem to oppose the tariffs (cnn.com).
But, what about consumerism in the next decade? Will we truly, again, enter into a new Roaring 20s?? Well, short-term, it would seem like “Yes.” Median predicted GDP growth for the year is 4.7% (Bloomberg). We are seeing innovations in electric vehicles, renewable energy, machine learning, artificial intelligence, and more. But, long-term economic growth rivaling that of the 1920s is not likely. Breakthroughs in information technology and biotech simply do not rival the innovation of the combustion engine and widespread electricity (Bloomberg). Robert Gordon, economics professor at Northwestern University, is a proponent of the idea that “there is no chance of sustained decade-long growth that matches the achievement of the 1920s” (Bloomberg). Though we are still the world’s largest economy, we do not have near the production capacity of the 1920s and no tariff or government spending can bring us back.
But, that’s okay! We are not the same economy. We probably won’t see the same decade-long boom the 1920s did, but steady, healthy growth is certainly achievable. So, in short, no, we are not entering the “Roaring 2020s.” But, personally, I think with the innovation happening because of COVID (check out Blogger Erik Bearman’s article for more about that) and confidence from investors in the American economy, we can see a decade of economic prosperity.
Second Editor-in-Chief: Sara Habibipour
Sources:
https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act
https://www.cnn.com/2021/03/24/politics/china-tariffs-biden-policy/index.html
Our roaring 2020s is based on a artificial economy for some sectors and others truly money made from the advent of new areas of business growth. There are work sectors that will be obliterated and new ones that will never leave us. Online shopping, food and other deliveries, online work and other home-based services. Even the business of education will change. Public schools will see a demise and private schools of various sorts along with alternative homeschooling will enter a new era.
I was at CVS the other day, and the manager told me that his branch was told to cut 80 hours of the staff in order to be more automated to show more profit and also to make customers be more automated with their prescriptions and check out.
The stimulus checks have been distributed in mass amounts, but to an extent to the cost of people of your generation having to pay it back through taxation or cuts in programs that serve our society. Nothing is free.
The wealthy are richer than the gilded age as technology money is made faster and larger. What was $1 million dollars then is now is over $13 million. The speed of technology money is insane and the financial and educational divided will reshape our American outlook. The investment into technical trades is a greta need. Four-year degrees need to be repurposed.
People in my age group (50-60) have seen changes that were not imagined. Our salaries are lower for our degree level and our expenses are higher. And what was a slam dunk for my parents’ generation is a longer haul before the “golden years,” but also aging and medicine has changed. Access, intervention and affordability is key to long life. There are better medications and techniques to stay healthier and live longer. The key…no prior drug use or poor genetic lineage. Many of my contemporaries will not live as long as their parents due to massive drug use and more cancers. It is sad commentary.
The key is technology and hopefully eager young people wanting to take chances at work and perseverance and ;life long learning. Yes, we can have a robust economy but we need to be careful of separating the truth from the falsehoods true economies. It takes time to see where we go and also the reshaping of how our currency is used and exchanged.