Goldman Sachs analyst says the world is entering a new supercycle

A supercycle is generally defined as a prolonged economic expansion, often accompanied by strong demand for goods that leads to GDP growth, rising prices, and high levels of employment.

Mr. Oppenheimer said that the last significant supercycle that the world economy has experienced began in the early 1980s, and discussed the contents of his newly published book, “Any Happy Returns.''

This situation was characterized not only by economic policies such as deregulation and privatization, but also by a peak in interest rates and inflation, which preceded a decades-long period of declining capital costs, inflation, and interest rates, he said. explained. Meanwhile, geopolitical risks have eased and globalization has strengthened, Oppenheimer said.

However, he added that not all these factors will remain in place.

“It is unlikely that interest rates will fall this aggressively over the next decade or so. We will see a backlash against globalization and, of course, geopolitical tensions will rise.”

The war between Russia and Ukraine, tensions between the US and China, mainly related to trade, and the conflict between Israel and Hamas, which is raising concerns across the Middle East, are geopolitical developments that markets have been concerned about in recent months and years. It's just part of the theme.

Oppenheimer said that while current economic developments should theoretically lead to a slowing of the pace of financial returns, there are also forces that could have a positive impact, namely artificial intelligence and decarbonization.

He said AI is still in its infancy, but could have a “positive impact” on stock prices as it becomes more used as the basis for new products and services.

Hot topics around AI and productivity are often closely tied to discussions and concerns about replacing or changing human jobs, which can impact the economy.

“The second thing is, [that] We haven't seen it yet, and we're relatively positive that we'll see it, [is] “Improving productivity through the application of AI can be positive for growth and, of course, for profits,” Oppenheimer said.

Oppenheimer said that although AI and decarbonization are both relatively new concepts, there are historical similarities.

One period that stands out historically is the early 1970s and early 1980s, which are “not that dissimilar” to current developments, he said. He said rising inflation and interest rates were probably more structural issues than they are now, but factors like rising geopolitical tensions, higher taxes and tighter regulations appear to be similar.

In another sense, Oppenheimer explained, current changes can be seen as reflecting changes further back in history.

“It's because of this huge twin shock that we're going to see, a positive shock from the very fast pace of technological innovation and the restructuring of the economy towards decarbonisation. I think I'm really close to that age.'' Late 19 years old^th century,” he said.

Modernization and industrialization facilitated by infrastructure and technological developments, along with significant increases in productivity, characterize this historical period.

Importantly, Oppenheimer noted that these historical parallels may offer lessons for the future.

“If you look back at the past, cycles and structural breakdowns repeat themselves, but never in exactly the same way. And I think we need to learn certain things from history. This type of situation What reasoning should we consider to indicate the best position for the environment we are moving into? ”

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