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Q2 Equipment Leasing & Finance U.S. Economic Outlook - April 2012
Summary:
- Overall, investment continues to be a main driver of U.S. economic growth. In particular, investment in equipment and software has grown steadily for eight straight quarters. Expectations for 2012 are that growth will moderate slightly, but remain positive overall.
- Trends in equipment investment include:
- Agriculture equipment investment is likely to decelerate slightly in the next three to six months.
- Computers & software equipment investment will remain healthy, but is likely to slow down somewhat.
- Construction equipment investment is likely to slow in the immediate near term, but could be buoyed by the energy and housing sectors later in 2012.
- Industrial equipment investment will likely be hampered by macro-trends, which may cause some deceleration in growth from what appears to be a recent peak in the growth rate.
- Medical equipment is on watch for a leveling-off in investment spending.
- Transportation equipment investment should remain solidly positive, but is unlikely to maintain the rapid growth rates of 2011.
- Credit market conditions are improving slowly as demand for financing grows and supply constraints gradually ease. Conditions remain favorable for purchasing versus leasing, though the expiration of tax benefits may provide a marginal boost to leasing. Otherwise, interest rates are near record lows and are likely to remain low through 2012.
- A triple threat of headwinds continues to drag down growth—high oil prices, uncertainty surrounding the Eurozone debt crisis, and a slowdown in China and other emerging markets.
- Overall, the macro outlook for 2012 calls for a slow improvement, as high oil prices continue. Real U.S. gross domestic product (GDP) growth of 2.3 percent is forecast (down from 2.4 percent in December), and inflation is forecast to average 2.4 percent for the year.
- Looking to the second half of the year, notwithstanding an external shock, the U.S. is poised for faster growth driven by pent-up demand in the consumer and business sectors.
