The Equipment Leasing & Finance Foundation released its Q2/24 Equipment Leasing & Finance Industry Snapshot. Designed for use in executive briefings and presentations, the presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry with charts and short narratives of key trends.
Q2 2024 Snapshot Highlights
- The foundation projects that the U.S. economy will grow by 2.3% in 2024, up from 1.7% in its Q1/24 snapshot.
- The U.S. economy had another strong quarter in Q4/23 with 3.4% SAAR growth. Consumer and government spending boosted growth and investment, while the labor market remained strong.
- Both job growth and consumer spending are expected to slow in 2024 but remain healthy while inflation inches toward the Federal Reserve’s 2% target over the course of the year.
- Economic tailwinds
- Easing energy prices have put downward pressure on inflation over the last year due to record-high U.S. production levels for both oil and natural gas. Though oil prices have been more turbulent, prices may soon start on a path of gradual decline given softening global demand projections.
- Job growth continued in Q1/24, while wage growth outpaced inflation. The labor market remains the U.S. economy’s strongest tailwind and appears to be at lower risk of overheating, which is a positive sign for containing inflation.
- Economic headwinds
- Softening new vehicle sales are a sign that consumer spending appears likely to slow this year. Reduced demand may lead to lower prices.
- Global economic growth may be sluggish, as the IMF forecasts 2024 global growth of 3.1%. This is slightly lower than 2023 and well below the historical average, with challenges particularly acute in the Eurozone and China. Geopolitical conflict remains a risk and has significant implications for energy markets and global supply chains.
- A factor to watch is a consumer spending slowdown.
- Consumer demand has been robust over the last four years, driving U.S. economic recovery.
- Spending growth is catching up with income growth, driving the personal savings rate downward. Meanwhile, revolving debt is rising quickly, and student loan payments have now resumed.
- A spending slowdown appears to be inevitable, but strong job and wage growth may result in a more gradual decline.
- Equipment and software investment is expected to grow at a 2.2% pace in 2024, holding steady with the ELFF’s projection in its 1/24 snapshot.
- E&S investment expanded 3.2% (annualized) in Q4/23 after shrinking 0.3% in Q3/23. Elevated interest rates will continue to drag on investment in 2024, and the climate for near-term investment is still relatively weak.
- Business investment expanded at a 3.7% annualized pace in Q4/23 driven by growth in non-residential structures investment, accelerating from a weak 1.4% in Q3/23.
- New business volume growth reported in the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index was up 4.9% year to date in February, outpacing the rate of inflation. On a nominal basis, year-over-year growth in new business volume was positive in January and February.
