Back to the future: 2020s to echo roaring 20s or inflationary 70s?

LONDON (Jun 14) - The 2020s have only just begun but there is already a rush to draw parallels with the past, prompted by a belief that COVID-19 will mark a turning point for the world economy and financial markets.

For some, a post-pandemic economic boom accompanied with optimism about the future echoes the 1920s. Others reckon this decade is beginning to feel like the 1970s, as dormant inflation awakens.

Whatever path the decade takes will of course matter for the trajectory of stocks, bonds, currencies and commodities.

"Changes, shifts and dynamics of narratives matter in the formation of long-term expectations and ultimately (market)prices," said Amundi CIO Pascal Blanque.

Here's a look at which decade the 2020s could resemble.

1. 1920s

In the 1920s, technological and scientific advances led to mass production of goods and the electrification of America, alongside booming stock markets and wealth.

Fast forward to the 2020s and the global economy is expected to grow 6% this year, a rate not seen since the 1970s. Stocks are near record highs, and tech valuations at their highest since the late 1990s dotcom peak. COVID-19 appears to be a catalyst for technological change, spurring digital adoption.

No wonder parallels are drawn with the "Roaring Twenties".

Reuters