Executive Summary:
Halfway through the decade, our Roaring 2020s investment theme remains on track. The US economy continues to prove remarkably resilient, supported by the robust spending of businesses and consumers, especially Baby Boomers. So far this year, it has been acing the stress tests of Trump’s trade policies. If the final years of the decade pan out as expected, Dr Ed reckons that the S&P 500 price index may be around 10,000 as the 2030s begin. And there’s no reason to expect the roaring to stop then.
The Roaring 2020s I: So Far, So Good
For years, we’ve been calling this decade “the Roaring 2020s” and pointing out the similarities to the Roaring 1920s. We first discussed this concept in our August 11, 2020 Morning Briefing titled “Another Roaring Twenties May Still Be Ahead.”
The US economy was driven by lots of productivity-enhancing innovations during the 1920s including automobiles, electricity, indoor lighting and plumbing, household appliances, frozen foods, and penicillin. These all increased the standard of living of Americans. The stock market soared. To a large extent, the 1920s was driven by a Consumer Revolution, which continued during the 1930s. It was interrupted by World War II and resumed during the 1950s and 1960s.
The US economy continues to be led by consumer spending. However, since the mid-1960s, there has also been a Digital Revolution focused on processing more and more data as fast as possible and as cheaply as possible. Information technology has come a long way from the IBM mainframes of the 1960s. During the current decade, it has evolved into the AI race to
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