Equipment and software investment growth cooled in the early months of 2023, with the Equipment Leasing & Finance Foundation lowering its annual forecast for investment growth to 1%, according to the Q2 update to its 2023 Equipment Leasing & Finance U.S. Economic Outlook. The report also predicts sluggish economic growth as the economy edges closer toward recession, which the foundation continues to expect will begin during the second half of the year. Overall, the ELFF forecasts that annualized economic growth will be 0.7% in 2023, largely driven by a solid jump-off point at the end of last year.
The report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate.
“Despite the U.S. economy ending 2022 with healthy growth and maintaining some momentum into early 2023, equipment and software investment softened to 2% annualized growth in Q4 and remains under pressure,” Nancy Pistorio, chair of the ELFF and president of Madison Capital, said. “The economy is still above water, but most indicators point to slowing growth, and many economists continue to expect a recession to begin later this year. Should that come to pass, I also expect the equipment finance industry will demonstrate its characteristic resilience, innovation and resolve, and will continue to serve the financial needs of our customers regardless of the economic climate.”
Highlights From the Q2 Update to the 2023 Outlook
The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the economic outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. This month two verticals are expanding, two are recovering and eight are weakening. Over the next three to six months, year over year:
The ELFF produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides a U.S. macroeconomic outlook, insights about credit market conditions and key economic indicators. The Q2 report is the first update to the 2023 outlook and will be followed by two more quarterly updates before the publication of the 2024 outlook in December.
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