Business

‘Roaring 2020s’ Ahead Thanks to Tech, AI Boom: Yardeni

By Jake Beardslee · July 27, 2023

Economist Ed Yardeni predicts techn innovation will drive productivity gains and economic growth through the 2020s. Investorsnewstips01, CC BY-SA 4.0 , via Wikimedia Commons

Noted economist Ed Yardeni foresees a new era of rapid productivity growth driven by unprecedented technological advances laying the foundation for an era of economic expansion not seen in decades.

“I think productivity is going to make a comeback,” Yardeni told Bloomberg News. “There’s robotics. There’s automation. There’s quantum computing.”

“I think this is going to turn out to be something like the Roaring 2020s,” said Yardeni, President of Yardeni Research, a sell-side consulting firm that provides global investment strategy and asset allocation recommendations. “By the end of the decade, we’ll look back on and say, ‘You know, it started out awful. But it ended up awfully good.’”

However, Yardeni did acknowledge that the inflation outlook still looms large, as companies report their earnings. “Going through all of these earnings seasons over the last year, I think we saw some pricing power for companies, and maybe that’ll be reflected in this latest batch of results,” he said.

He also noted that moderating inflation could draw some momentum away from sales growth. “If the inflation picture improves, all of a sudden maybe that takes a little bit of momentum away from the sales picture,” Yardeni said. “So, maybe you’re talking about a little bit of a stall out in the S&P top line revenue story.”

Even so, Yardeni believes improving profit margins will offset any stall in revenues. “Whatever slowdown we see in revenues because inflation moderates will be offset by an improvement in the profit margin,” he said.

Light Wave commentary

Top economist Ed Yardeni predicts a decade of robust economic expansion fueled by innovations in robotics, automation, quantum computing and, of course, artificial intelligence. He believes we could see a “Roaring 2020s” take shape, despite the difficult start to the decade amid the pandemic. (The original “Roaring Twenties” of a century ago started similarly with the deadly Spanish flu pandemic.)

While acknowledging near-term economic headwinds from inflation and other factors, Yardeni’s thoughtful analysis lends a welcome note of optimism at a time of economic uncertainty.