The Equipment Leasing & Finance Foundation released its April 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 52.9, the second-highest mark for the index in the last two years but a decline from last month’s mark of 55.2.

“Monetary policy has not been as effective in taming inflation that recently came in at an annual rate of 3.2%,” Mark Bonanno, president and chief operating officer at North Mill Equipment Finance, said. “The U.S. government as well as the consumer (via credit cards) have unsustainable debt levels, and that will eventually cause cracks in the economy.”

When asked to assess their business conditions over the next four months, 10.7% of the executives responding said they believe business conditions will improve over the next four months, a decrease from 19.4% in March, while 85.7% believe business conditions will remain the same over the next four months, up from 77.4% last month, and 3.6% believe business conditions will worsen, relatively unchanged from 3.2% in March.

According to the survey, 7.1% of respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, down from 25.8% in March, while 92.9% believe demand will “remain the same” during the same four-month time period, up from 71% last month. None believe demand will decline, a decrease from 3.2% in March.

“Our business is focused on agriculture and rural America. In many cases, ag producer profitability is down or expected to be down compared to the levels of recent years,” Jason Lueders, president of Farm Credit Leasing, said. “This situation could make the cash flow and liquidity preservation benefits of a lease more attractive and valuable than they have been. The offset is that credit quality may be more of a challenge, but we expect it to remain quite manageable.”

This month, 14.3% of the respondents said they expect more access to capital to fund equipment acquisitions over the next four months, down from 16.1% in March, while 71.4% of executives indicated they expect the “same” access to capital to fund business, down from 74.2% last month, and 14.3% expect “less” access to capital, up from 9.7% in March.

When asked, 17.9% of the executives reported they expect to hire more employees over the next four months, a decrease from 19.4% in March, while 71.4% expect no change in headcount over the next four months, up from 67.7% last month, and 10.7% expect to hire fewer employees, down from 12.9% in March.

None of the leadership evaluated the current U.S. economy as “excellent,” unchanged from last month, while 92.9% of the leadership evaluated the current U.S. economy as “fair,” down from 93.6% in March, and 7.1% evaluated it as “poor,” up from 6.5% last month.

According to the survey, 17.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 25.8% in March, while 71.4% believe the U.S. economy will “stay the same” over the next six months, an increase from 54.8% last month, and 10.7% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 19.4% last month.

“The overspending by the Federal government is contributing greatly to driving up inflation,” James D. Jenks, CEO of Global Finance and Leasing Services, said.

In April, 17.9% of respondents indicated they believe their company will increase spending on business development activities during the next six months, a decrease from 22.6% in March. Meanwhile, 78.6% believe there will be “no change” in business development spending, up from 64.5% in March, and 3.6% believe there will be a decrease in spending, down from 12.9% last month.