Roaring Twenties Redux?

by Pierre G. Villere

Last month, I wrote about the lasting effects of Covid-19 long after a vaccine and herd immunity allow us to climb out of our world of lockdowns, quarantines, masking, and social distancing. I keep hearing about the “new normal,” and thought it would be interesting to review how the world emerged from the last great pandemic, which was the Spanish Flu in 1918-19. The pandemic immediately followed the disruption of World War I, and just added to the misery and poor sentiment of that era. The Spanish Flu took the lives of an estimated 50-100 million people and crippled the global economy. But what emerged afterwards was a powerful economic boom known at the Roaring Twenties, an era of unprecedented economic growth and social evolution that was driven by post-war, post-pandemic optimism and a pent-up demand by consumers who welcomed calmer times.

In 1920, exactly 100 years ago, Warren G. Harding was elected president of the United States in a landslide after carrying 60.3 percent of the popular vote. And his success was due to the simplicity of his campaign message, one that resonates with us all today: A return to normalcy. (It is interesting to note that he was heavily criticized by the press at the time for his misuse of the word “normality,” the proper word which he malapropped into “normalcy.” Today, normalcy is the accepted term in the dictionary). His idea was to quiet the tension and unrest that had gripped the country in the one-two punch of a global war and a pandemic, and usher in an age of growth and prosperity as the population yearned for the prosperous days before the war. His words at the time, “America’s present need is not heroics, but healing” could not be truer today, exactly a century later.

And he succeeded. We did heal … and prosper. This period saw the large-scale development and use of automobiles, telephones, movies, radio, and electrical appliances in the lives of millions. Aviation soon became a business. Nations saw rapid industrial and economic growth, accelerated consumer demand, and significant new trends in lifestyle and culture. The media, funded by the new industry of mass-market advertising driving consumer demand, focused on celebrities, especially sports heroes and movie stars, as cities rooted for their home teams and filled the new palatial cinemas and gigantic sports stadiums. The spirit of the Roaring Twenties was marked by a general feeling of novelty associated with modernity, and a break with tradition.

I predict we are on the cusp of another Roaring Twenties, what I call the “Roaring Twenties II.” Coming out of the current pandemic, there is another round of modernity that will continue to revolutionize our daily lives, such as the far-reaching effects of artificial intelligence, breakthroughs in vaccines and treatments in medicine that will further control illnesses such as cancer and heart disease, the revolution in consumer spending that has migrated to online retailing from the traditional brick-and-mortar era of the last century, and more and more technologies that continue to automate every corner of our lives.

As a firm, we feel strongly about the Roaring Twenties II. Our industry produced 458 million cubic yards of concrete in the 2005-06 subprime-driven housing boom, and we have been slowly climbing back to those volumes since the bottom fell out in the financial crisis of 2008. In 2019, we produced 371 million cubic yards, more than 87 million cubic yards less than our peak 15 years ago. And it appears production stalled in 2020 at almost the same levels as 2019 because of the pandemic—and its profound effects on our economy.

But a boom is right around the corner; my crystal ball says the Roaring Twenties II will see production accelerate through mid-decade, and we will have surpassed the previous production highs well before we move into our third decade of the 21st century some 10 years from now.

History has a way of repeating itself, so get ready for the Roaring Twenties II … it will be a great time for our industry.

Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers & acquisitions. He has a career spanning almost five decades, and volunteers his time to educating the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at [email protected]. Follow him on Twitter – @allenvillere.