Highlights from the study include:
- The U.S. economy is expected to grow 3.0% in 2014, the fastest pace since the 2008-09 recession. Assuming there is a solution to the current budget discussions, economic growth will be driven by a number of positive factors. Specifically, a strong housing market recovery, falling natural gas prices, robust auto sales, record high household wealth, steadily improving credit availability, and improving employment. However, these positive trends are counter-balanced by high oil prices, slow international growth, moderating fiscal consolidation and the continued threat of policy uncertainty.
- In 2014, more dependable economic growth will help to generate stronger overall investment in equipment and software. Additionally, a rising interest rate environment could induce companies to lock in lower rates. Overall, these trends could yield a positive result for the equipment finance industry.
Trends in equipment investment include:
- Agriculture equipment investment is expected to remain weak on a quarter-to-quarter basis, and is projected to decline by 4% in 2014.
- Computers & Software investment is expected to continue growing at the current below average rate. Annual growth should be in the 2% to 4% range during Q4 of 2013.
- As expected, construction equipment investment declined in Q3 of 2013, falling 2.8% year-over-year. After reaching record-levels of investment in 2013, this vertical will likely decline by 5% to 10% in 2014.
- Industrial equipment investment accelerated to 5.0% annual growth in Q3, and is expected to maintain a steady growth trend going forward. Employment, new orders, and earnings data point to a positive 2014.
- Medical equipment investment grew in Q3 but the sectorâ€™s leading indicators suggest little to no growth going forward.
- Transportation equipment investment saw modest growth in the third quarter, and improving indicators point stronger momentum over the next six to 12 months.
The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economics and public policy consulting firm Keybridge Research. The annual economic forecast provides a three-to-six-month outlook for industry investment with data, including a summary of investment trends in key equipment markets, credit market conditions, the U.S. macroeconomic outlook and key economic indicators. The report will be updated quarterly throughout 2014.