ELFF Projects 2.3% Growth in US Economy for 2023 in Latest Industry Snapshot

The Equipment Leasing & Finance Foundation released the Q4/23 Equipment Leasing & Finance Industry Snapshot, an information resource for industry participants. The presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry.

Snapshot Highlights

  • The foundation projects that the U.S. economy will grow by 2.3% annualized in 2023. The U.S. economy expanded at a 2.1% annualized rate in Q2/23, the fourth consecutive quarter of solid economic growth. According to the foundation, growth in Q2/23 was broad-based, fueled by consumer and government spending and business investment.
  • Economic tailwinds for growth in 2023 include:
    • The labor market, which remains a pillar of strength, adding more than 2.3 million jobs in 2023 as of September.
    • Consumer spending, which remains a crucial driver of economic growth. Retail sales growth was higher than expected over the summer, with strong spending at e-tailers, sporting goods stores and restaurants and bars, which are usually some of the first areas where consumers pull back, according to the foundation. Despite rising debt levels, consumers kept the U.S. economic engine turning during Q2/23 and Q3/23.
  • Economic headwinds include:
    • Consumer debt, as growing concerns persist for deteriorating consumer financial health.
    • A global economic slowdown with eurozone countries facing headwinds and global inflation, falling prices in China raising concerns of a “deflationary trap” and flagging global demand potentially reducing U.S. exports and business investment.
    • Inflation, which has eased significantly since last year but is still above the Federal Reserve’s target.
    • Oil price fluctuations posing a challenge as the Fed tries to control inflation.
    • Labor strike activity, including the United Auto Workers strike, one of nine strikes in August involving more than 1,000 workers.
  • Equipment and software investment is expected to grow at a 3% pace in 2023.
    • Equipment and software investment growth was strong in Q2/23, but early indications suggest that investment may weaken in Q3 and Q4 as credit availability has continued to tighten.
  • New business volume growth reported in Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index was up 2.8% year to date in August, a deceleration from August 2022 when year-to-date growth was 5%. After strong growth in early 2023, year-to-date new business volume growth softened in Q2/23 and Q3/23 in the face of higher interest rates and tightening lending standards.

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