2020 Report cover

2020 Equipment Leasing and Finance U.S. economic outlook

The 2020 Equipment Leasing and Finance U.S. Economic has been released. This comprehensive report analyzes global and domestic trends impacting capital spending and economic growth in the coming year. It identifies key signposts specific to the equipment finance industry and features Momentum Monitors that identify turning points for 12 verticals in their respective investment cycles. Each economic outlook is updated quarterly.

Equipment and software investment growth decelerated for the second consecutive quarter in Q2 but remained positive, primarily due to moderate annualized growth in software (equipment investment was essentially flat). Although a recession in the next six months appears unlikely, business conditions for the equipment finance industry are also unlikely to improve materially over the rest of the year, particularly for equipment verticals that serve the manufacturing sector.

Over the next three to six months:

  • Agricultural Machinery investment growth should improve;
  • Construction Machinery investment growth should increase modestly;
  • Materials Handling Equipment investment growth may improve;
  • All Other Industrial Equipment investment growth is likely to remain moderate;
  • Medical Equipment investment growth should strengthen;
  • Mining & Oilfield Machinery investment growth should improve modestly, but is likely to remain weak overall;
  • Aircraft investment growth is likely to remain in negative territory;
  • Ships & Boats investment growth should remain weak;
  • Railroad Equipment investment growth should soften;
  • Trucks investment will likely weaken;
  • Computers investment is likely to remain weak; and
  • Software investment growth growth should remain strong.

U.S. Capital Investment & Credit Markets:

Capital investment contracted for two consecutive quarters in 2019 and is expected to remain muted in early 2020, in large part due to the ongoing trade war with China and other slowing economies around the world. Despite weak or negative investment growth and faltering business confidence, credit market conditions remain broadly healthy. Financial stress, while up slightly, remains subdued by historical standards and credit supply, while slightly tighter, is still not cause for concern. However, demand for credit — especially by businesses — has weakened notably, which may portend a further slowdown in business investment in 2020.

Overview of the U.S. Economy:

The U.S. economy saw uneven growth over the course of 2019 and ultimately decelerated from its 2018 pace. Consumers were the economy’s driving force throughout the year, buoyed by the strongest labor market in a generation and faster wage growth. However, political uncertainty, tariffs, and reduced economic activity among several key trading partners have weighed on U.S. exports and business investment. These headwinds show few signs of abating, which should lead to slower growth in 2020.