ELFF Industry Snapshot: U.S. Economy Projected to Grow by 2.7%

JAN 7, 2025 - 5:56 am

The Equipment Leasing & Finance Foundation released the 2025 Equipment Leasing & Finance Industry Snapshot, which summarizes the current conditions and projections for the U.S. economy and equipment finance industry.

Among the wide range of details in the Q1 2025 Snapshot:

The foundation projects that the U.S. economy will grow by 2.7%.
The U.S. economy expanded at 2.8% (SAAR) in Q3/24, a slight decrease from 3.0% growth in Q2/24.
Three key factors boosted the U.S. economy in 2024 and set the stage for continued economic growth in 2025: a strong labor market, rising household wealth and resilient consumer spending.
Economic tailwinds:
- Q3/24 growth was primarily driven by consumer spending, supported by a boost in government spending and business investment.
- Economic headwinds include negative growth in private inventories, residential investment and net exports.
- Equipment and software investment is expected to grow at a 4.7% annualized pace in 2025.
- Equipment and software investment expanded 7.5% in Q3/24 (annualized) after growing 7% in Q2/24. Growth was positive in seven of 12 tracked verticals.
- Moderate growth is expected during the first half of the year with upside potential later in the year if inflation cools further toward 2%, and the Fed responds by further lowering interest rates.
By equipment type:
- Six of 12 verticals are exhibiting recent momentum that is stronger than historical norms, including computers and mining & oilfield machinery.
- Investment growth in other industrial equipment and trucks appears set to shrink in the coming six months.
- New business volume growth reported in ELFA’s CapEx Finance Index (formerly the MLFI-25) in October was up 11.9% Y/Y, 5.1% M/M, and up 3.7% YTD, outpacing the rate of inflation.
Special Topic – Trump’s Second Term, An overview of three key policy areas in the new administration:
- Tariffs: As an economic strategy, economic consequences and retaliation and uncertainty and opportunities
- Taxes: The 2017 Tax Cuts and Jobs Act, impact of new legislation on investment and potential long-term implications
- Industrial Policy: Policy priorities are likely to shift regarding renewable energy, domestic manufacturing and infrastructure development projects, with the effect on equipment demand unclear.