ELFF Projects 3.5% US GDP Growth in 2022, 4.6% Equipment Investment Growth

The Equipment Leasing & Finance Foundation released its Q1/22 Equipment Leasing & Finance Industry Snapshot. Designed for use in executive briefings and presentations, the presentation slide deck summarizes current conditions and projections for the U.S. economy and equipment finance industry with charts and short narratives of key trends.

Highlights from the Q1/22 Snapshot

  • Overall, the ELFF projects the U.S. economy will grow by 3.5% in 2022. U.S. GDP growth slowed markedly in Q3/21, expanding 2.1% (annualized) as the delta variant and snarled supply chains slowed growth. Growth in Q3 was driven by increases in consumer spending and a buildup in private inventories.
  • Economic tailwinds for growth in 2022 include:
    • An improved public health situation given the widespread availability of vaccines and relatively high vaccination rates.
    • The Infrastructure Investment and Jobs Act, the largest public infrastructure spending initiative since the 2009 Recovery Act. It will be a tailwind for equipment verticals, including trucks, railroads, communications and materials handling equipment (along with software).
  • Economic headwinds for growth in 2022 include:
    • Labor market tensions as workers use their leverage amidst robust demand for labor.
    • Persistent supply chain disruptions, with many industries facing high shipping costs and delivery delays, and the potential for additional bottlenecks if U.S. trading partners shut down borders in response to new virus strains.
    • Worsening inflation pressures that previously were mostly contained to industries impacted by the pandemic and are now broader based.
  • Additional factors to watch include:
    • Housing market activity, which is showing some signs of slowing.
    • Overvalued equity markets given substantial increases in the last 18 months and the sell-off that followed news of the new omicron variant.
    • Accelerated financial tightening as the Federal Reserve signals rate hikes and the end of its asset purchase program sooner than expected.
  • Equipment investment is expected to grow at a 4.6% pace in 2022 (annualized), a slower pace compared with 2021.
  • New business volume growth reported in in the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index expanded 16% year over year in October. Solid business investment growth is expected to drive new business volume growth throughout 2022, although year-over-year growth may ease compared with the double-digit expansion of 2021.

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