ELFF Lowers Projection for U.S. Economic Growth in Latest Industry Snapshot

The Equipment Leasing & Finance Foundation released its Q3 2022 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. Prepared by Keybridge Research and updated quarterly, the snapshot is available for free here.

Snapshot Highlights

  • Overall, the ELFF projects the S. economy will grow by 1.6% in 2022, a marked slowdown from earlier estimates. The downward revision is largely due to high inflation, substantial Fed rate hikes and a slowing global economy.
  • Economic tailwinds for growth this year include:
    • A strong labor market with plentiful job openings and strong wage growth in several industries (e.g., retail and hospitality)
    • A healthy manufacturing sector, which, after adjusting for inflation, is outperforming other major economic sectors
  • Economic headwinds include:
    • Surging inflation: The Consumer Price Index in June was at its highest since 1981, and has shown few signs of easing. Inflation is becoming increasingly embedded in service sector prices, which likely means it will persist longer.
    • Snarled supply chains, with the Russia-Ukraine war adding to COVID-19-related disruptions, particularly global energy prices, and retailers’ unsold inventory expected to reduce global economic growth and increase inflation.
  • Additional factors to watch include:
    • Housing market momentum
    • Consumer financial stress
  • Equipment and software investment is expected to grow by 5.9% in 2022 largely due to massive growth in Q1/22; however, growth is forecasted to slow sharply over the rest of 2022 as businesses cut back in the face of substantial uncertainty and a slowing economy.
  • New business volume growth reported in the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index was up 7.5% year to date and 16% year over year in May. Robust investment growth early in the year supported NBV growth, though growth may slow later this year as inflation and interest rate hikes impact the economy.

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