The Roaring Twenties Are Back Again (1920 vs 2020)
The roaring twenties were a decade made famous by flappers, prohibition, women’s suffrage, and financial upswings. Growth in American in the 1920s was unprecedented. What was the economy like throughout that decade and will the 2020s have any similarities?
Updated on Jan 02 2020
The roaring twenties were a decade made famous by flappers, prohibition, women’s suffrage, and financial upswings. Growth in America in the 1920s was unprecedented. What was the economy like throughout that decade and will the 2020s have any similarities? While we look forward to a new decade, now is the time to make sure your retirement planning is on schedule.
The 1920s economy
As shown by its nickname, the “roaring” 1920s was a period of economic growth and expansion in the US. With the end of WWI, “US prosperity soared as the manufacturing of consumer goods increased.” Cars, washing machines, and refrigerators became commonplace and the auto and airline industry took off. With all of these new products hitting the market, the US economy boomed.
Between 1922 and 1927, the US economy grew by around 7 percent. Wages and income levels rose, in addition to business growth. Overall production grew by 64 percent throughout the decade and 2% of workers were unemployed. While this booming economy didn’t ensure that every American was rich, it did allow more citizens to have excess money to put back into the economy. Money in the 1920s was plentiful and Americans weren’t focused on saving — they wanted to spend.
All the spending in the 1920s turned into regret when the stock market crashed in 1929 due to rapid expansion and growing consumer debt. The crash sent Wall Street into a panic and millions of investments were wiped out. This started a steep decline in consumer spending and caused unemployment rates to skyrocket, prompting the Great Depression.
The roaring 2020s?
So will the 2020s bring the same economic prosperity as the 1920s? It depends on who you ask. Pete Navarro, a White House trade advisor, predicts 3% GDP growth in 2020 and beyond. In an interview with CNBC, Navarro stated, “It’s going to be the roaring 2020s next year. [Dow] 32,000 is a conservative estimate of where we’ll be at the end of the year.”
Others aren’t as hopeful. While employment rates are down, the number of Americans who are underemployed is growing. Those who are underemployed are working part-time or in a job that they are overqualified for. Along with underemployment, massive student loan and credit card debt and a lack of savings are crippling American’s finances. And this isn’t just affecting Millennials and Gen Z, Baby Boomers are suffering, as well.
Americans today are shockingly unprepared for retirement — so much so that leading financial experts are saying that we are in a retirement crisis. Americans are underestimating the amount of costs they will have in retirement and underestimating how much money they need saved. Some retirees don’t have anything saved and are just living on social security. Others are living with their children or getting financial help from them. This puts a monetary strain on their children, who then have less money to save for their own retirement.
The 2020s and your finances
Regardless of what happens in the 2020s, it is essential that you take control of your finances in 2020 and beyond. While there is no guarantee of economic prosperity or a recession, knowing if you need help with your finances is the first step. We can learn from the 1920s that a booming economy does not mean to spend and not save. A healthy economy needs consumer-driven profits, but saving for your future is the single most important step you can take.
If you feel overwhelmed planning for your future, contact and set up a meeting with a financial advisor to come up with an actionable plan.
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