Key Takeaways from ELFA/ELFF Webinar: Coronavirus & the U.S. Economy



What is the state of the U.S. economy and the equipment finance industry in the face of the global COVID-19 pandemic? That was the focus of the webinar “Coronavirus and the U.S. Economy: Implications for the Equipment Finance Industry” hosted by the Equipment Leasing & Finance Foundation and the Equipment Leasing and Finance Association on April 15.

Below are five key takeaways from the webinar.

  1.  A global recession is already underway. China is slowly forging a path to economic recovery following its coronavirus outbreak, but that process is slow and uncertain. “China is trying to recover…but it’s now being held back by slowing export demand to Europe and to the U.S.,” noted Wescott. He added that Europe’s economy is being ravaged by COVID-19 and emerging markets such as India and Latin America may be next to suffer sharp downturns.
  2. The U.S. economy is also already in recession. The service sector, historically a resilient engine of growth, is leading the downturn, particularly in industries that rely on human contact, such as travel and tourism, restaurants, entertainment and personal services. “The U.S. is in the midst of a very notable recession,” said Wescott. “We think second quarter of this year is going to be bloody awful… This morning we got bleak industrial production data for March, we got bleak retail sales data for March, and we think we’re going to see a continuation of really bad numbers for the next couple of months.”
  3. The economy could be back in growth mode by the end of the year. The Foundation’s Outlook report forecasts a deep contraction in the U.S. economy in Q2. However, Jensen projected a return to growth in Q3 and Q4. Overall, the U.S. economy is expected to contract -5% to -9.4% in 2020. “The economy is going to be much smaller at the end of the year than it was at the beginning of the year,” said Jensen.
  4. This is likely to be a very tough year for the equipment finance industry. After slowing to the weakest growth since 2016 last year, equipment and software investment is expected to plunge along with the rest of the U.S. economy. Overall, investment in equipment and software is projected to contract between -8.6 and -13.5% in 2020. Industries like computers and medical devices may be more resilient, however.
  5. Small businesses are at heightened risk. Bigger corporations have more financial room to stave off short- and medium-term shocks. A major shakeout in energy is coming, but this will likely lead to consolidation benefiting larger firms. Look for lingering pain in travel and tourism, accommodation and traditional retailing. “There’s a lot of uncertainty both with respect to how we reopen the economy and how many jobs are still there when we reopen the economy, particularly in the small business sector,” said Jensen.

More than 875 attendees participated in the event, which featured highlights from the Foundation’s Q2 Equipment Leasing and Finance U.S. Economic Outlook report, produced with longtime partner Keybridge LLC. Speakers Dr. Robert Wescott and Jeff Jensen of Keybridge offered insights on the economic, financial and political effects of the coronavirus pandemic over the next quarter as well as through the remainder of 2020 and answered participant questions during a live Q&A session.

More Webinars to Come

The April 15 webinar was part of ELFA’s new “Wednesday Webinar” series designed to help equipment finance professionals navigate the current market and regulatory landscape and anticipate the changing environment in the face of the COVID-19 pandemic. The free webinars include live Q&A sessions so participants can connect with experts and colleagues on the issues they are grappling with. Upcoming webinars include:

  • April 22: Federal Government Response to COVID-19 Pandemic
  • April 29: Cybersecurity and Fraud in the COVID-19 Environment
  • May 6: e-Signatures and e-Leases in the COVID-19 World

For complete information, view the webinar recording and download the PowerPoint presentation.

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Terry Mulreany
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