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Economic Outlook Report
The Equipment Leasing & Finance Foundation has released the fourth quarter update to its 2012 Equipment Leasing & Finance U.S. Economic Outlook, which projects growth in equipment and software investment for 2012 at 6.7%, down from the 2011 growth rate of 11%. The report, which is focused on the $628 billion equipment leasing and finance industry, forecasts equipment investment and capital spending in the United States and evaluates the effects of various related and external factors in play currently and into the foreseeable future.
The Q4 Outlook showed that growth in equipment and software investment slowed to an annualized rate of 4.8% in Q2, down from 5.4% in Q1. The report finds that the recent slowdown in durable goods shipments indicates that equipment investment continued to lose momentum in Q3, but should remain positive ' albeit at a decelerated pace compared with 2011 ' through the rest of 2012.
Key Findings
The report found the U.S. economy continues to grow at a slow pace, evidenced by weaker-than-expected job creation in the past three months. Although growth in equipment and software investment slowed to an annualized rate of 4.8% in the second quarter from 5.4% in Q1, it continues to be a driver of growth in an otherwise subdued economy.
Looking ahead to 2013, natural cyclical forces ' particularly housing ' should gain more traction and drive growth. However, some fiscal tightening is expected to counterbalance these positive trends. The revised projection for 2013 growth in equipment and software investment is 4.5%, down from the original forecast of 8%.
Trends in equipment investment include:
- Agriculture equipment investment is likely to decline by 5%-10% in the next three to six months.
- Computer and software equipment investment is projected to grow at a relatively slow pace of 1%-3%.
- Construction equipment investment is projected to continue to grow at a strong pace (15%+) as the housing market rebounds.
- Industrial equipment investment should grow at a moderate clip of 5%-9% in Q4.
- Medical equipment is likely to grow, but at a slow pace of 1%-2%.
- Growth in transportation equipment investment is likely
to moderate, but should stay above 15%+ over the next three to six months.
Credit Markets
Credit market conditions remain in flux and highly reactive to Federal Reserve policy and the latest events in Europe. The report anticipates that tensions in global credit markets will ease somewhat, and U.S. interest rates should marginally increase in 2013 as the “flight to quality” trend slowly unwinds.
The U.S. economy slowed in the second quarter of 2012 to an annualized growth rate of 1.3%, down from 2% in Q1 2012. Overall, the macro outlook for 2012 has not changed materially. Real GDP growth is holding at 2.2%, and inflation expectations dropped from 2.3% to 2.1%.
The Equipment Leasing & Finance Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economics and public policy consulting firm Keybridge Research. The annual economic forecast provides a three- to six-month outlook for industry investment with data, including a summary of investment trends in key equipment markets, credit market conditions, the U.S. macroeconomic outlook and key economic indicators. The full report may be downloaded at www.leasefoundation.org/IndRsrcs/EO/.
The Equipment Leasing & Finance Foundation has released the fourth quarter update to its 2012 Equipment Leasing & Finance U.S. Economic Outlook, which projects growth in equipment and software investment for 2012 at 6.7%, down from the 2011 growth rate of 11%. The report, which is focused on the $628 billion equipment leasing and finance industry, forecasts equipment investment and capital spending in the United States and evaluates the effects of various related and external factors in play currently and into the foreseeable future.
The Q4 Outlook showed that growth in equipment and software investment slowed to an annualized rate of 4.8% in Q2, down from 5.4% in Q1. The report finds that the recent slowdown in durable goods shipments indicates that equipment investment continued to lose momentum in Q3, but should remain positive ' albeit at a decelerated pace compared with 2011 ' through the rest of 2012.
Key Findings
The report found the U.S. economy continues to grow at a slow pace, evidenced by weaker-than-expected job creation in the past three months. Although growth in equipment and software investment slowed to an annualized rate of 4.8% in the second quarter from 5.4% in Q1, it continues to be a driver of growth in an otherwise subdued economy.
Looking ahead to 2013, natural cyclical forces ' particularly housing ' should gain more traction and drive growth. However, some fiscal tightening is expected to counterbalance these positive trends. The revised projection for 2013 growth in equipment and software investment is 4.5%, down from the original forecast of 8%.
Trends in equipment investment include:
- Agriculture equipment investment is likely to decline by 5%-10% in the next three to six months.
- Computer and software equipment investment is projected to grow at a relatively slow pace of 1%-3%.
- Construction equipment investment is projected to continue to grow at a strong pace (15%+) as the housing market rebounds.
- Industrial equipment investment should grow at a moderate clip of 5%-9% in Q4.
- Medical equipment is likely to grow, but at a slow pace of 1%-2%.
- Growth in transportation equipment investment is likely
to moderate, but should stay above 15%+ over the next three to six months.
Credit Markets
Credit market conditions remain in flux and highly reactive to Federal Reserve policy and the latest events in Europe. The report anticipates that tensions in global credit markets will ease somewhat, and U.S. interest rates should marginally increase in 2013 as the “flight to quality” trend slowly unwinds.
The U.S. economy slowed in the second quarter of 2012 to an annualized growth rate of 1.3%, down from 2% in Q1 2012. Overall, the macro outlook for 2012 has not changed materially. Real GDP growth is holding at 2.2%, and inflation expectations dropped from 2.3% to 2.1%.
The Equipment Leasing & Finance Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economics and public policy consulting firm Keybridge Research. The annual economic forecast provides a three- to six-month outlook for industry investment with data, including a summary of investment trends in key equipment markets, credit market conditions, the U.S. macroeconomic outlook and key economic indicators. The full report may be downloaded at www.leasefoundation.org/IndRsrcs/EO/.
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