The Roaring Twenties of the 20th century and the 2020s of the 21st century, though 100 years apart, present compelling parallels in their economic landscapes. In the 1920s, the world was emerging from the shadows of World War I, leading to a period of economic boom and cultural expansion. While the 2020s are yet to unfold fully, they too have been characterized by rapid technological innovation and social change as the world recovers from the global upheaval caused by the COVID-19 pandemic.
The hallmark of the 1920s was a remarkable surge in industrial production and stock market investments. The introduction of mass production techniques, particularly in the automotive industry, revolutionized manufacturing and employment. New technologies like cars, radios and motion pictures boosted economic activity and transformed American communities, culture and lifestyle. Fueled by post-war optimism, expanded credit systems and speculative investments, the stock market saw a meteoric rise during the 1920s.
Fast forward to the 2020s, the post-pandemic economy has been similarly shaped by the Fourth Industrial Revolution, with growth sourced to the Internet of things, quantum computing, biotechnology and advanced analytics. The rise of remote work, accelerated by the pandemic, is altering the nature of how and where we work and live. Again, similarly, equities markets have experienced some volatility; however, they continue to test new highs as traditional and new investors seek to make hay while the sun is shining.
Economic resurgence in the 1920s led to significant income gains for American households and new access to consumer credit. This gave consumers the buying power to acquire new inventions like radios, phonographs, vacuum cleaners, washing machines and refrigerators. Perhaps most importantly, Henry Ford’s advances in assembly-line efficiency made automobiles, notably the Model T Ford, affordable for more Americans. The price of the Model T Ford dropped from $850 in 1908 to $300 in 1924, helping increase the number of cars on the road from 6.7 million in 1919 to 23 million by 1929. This prosperity would not come without a price—consumer debt more than doubled, and residential mortgage debt rose by nearly 270 percent between 1920 and 1930.
The parallels between the 1920s and 2020s are clear. Federal Reserve data indicate U.S. households saw the largest increase in wealth ever between 2019 and 2022. With unemployment rates below four percent, wages and salaries increased by over six percent in 2022 and are on pace to increase by another five percent in 2023. U.S. consumers are spending. For the 12 months ending September 2023, personal consumption expenditures totaled $18.9 trillion, the highest amount ever reported. Higher prices certainly contribute to elevated spending levels but are plummeting U.S. saving rates and rising consumer debt.
We all know that the Roaring Twenties ended with the Great Depression. While that transition is a cautionary tale of economic excess and mismanagement, its application to our current economic situation is limited. These are different times. The economy is global and information is ubiquitous. The pendulum has swung far from the laissez-faire policies of the early 1920s and the depth and diversity of our nation’s economy provide stability and flexibility unimaginable a century ago.
During Herbert Hoover’s 1928 presidential campaign, he said, “Every man and woman knows that their comfort, hopes, and confidence for the future are higher this day than they were seven and one-half years ago.” Heading into 2024, we, too, find ourselves with greater hope and greater confidence than we had just four years ago when the uncertainty of a deadly virus appeared to threaten not only our economy but all humanity. That said, the Emerging 2020s are not without their challenges. We as a nation, as a state, as a community and as businesses and households will have the best opportunity to maximize our future economic potential by ensuring we remember and learn from the important lessons of our past.
Members of the editorial and news staff of the Las Vegas Review-Journal were not involved in the creation of this content.