Are We Ready for Another Roaring ‘20s?
In recent conversations with bankers, I’ve been struck by how optimistic everyone feels.
There’s a vaccine rollout, albeit slow so far. The government shoved billions of dollars at individuals and businesses in the last year, and many of them are still sitting on their piles of money, not spending it.
Could this lead to a sort of post-pandemic Renaissance in 2021 as the vaccines help curtail the virus?
The parallel to this time period is the end of the 1918 flu pandemic, which killed an estimated 50 million worldwide. In 1919, Germany signed the Treaty of Versailles with the Allied nations, ending World War I. The Roaring ‘20s followed: a period marked by social upheaval, a soaring stock market and rising inequality.
Barclays CEO Jes Staley made a comparison to the Roaring ‘20s at a recent World Economic Forum event, suggesting a strong second half of 2021.
Mark Tryniski, CEO of $14 billion Community Bank System, which is based in Dewitt, New York, made the comparison to the ‘20s when I spoke with him a few weeks ago. He predicts a much stronger economy come summer. “If you look at what was happening with the economy before Covid, we were cranking,” he says.
Dan Rollins, chairman and CEO of $24 billion BancorpSouth Bank in Tupelo, Mississippi, says he participated on a call recently with casino operators who expect an increase in demand this year as newly vaccinated customers rush to the slots. He thinks the public is primed to start going places once the vaccine is fully in place. “I do think there is pent-up demand,” he says. As a result of households spending less on things like travel, dining out and entertainment, an influx of deposits rushed to the banking industry.
Still, a more contagious strain of the virus is spreading throughout the world, which could lead to further shutdowns and depressed spending. As Covid-19 continues its spread, there is a greater opportunity for mutations. It could become more deadly. And the vaccine may prove less effective against these newer strains.
We can revisit the history textbooks and see that the 1918 flu didn’t actually end in 1918. It came in waves and wasn’t over until 1920. The economy, and the banking industry along with it, may be in for a longer haul than we would like.
• Naomi Snyder, editor of Bank Director
