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. The outlooks are updated quarterly.
Equipment and software investment growth is expected to improve in 2017 after a lackluster 2016, driven by strong gains in business confidence and robust residential housing investment. While the industrial sector continues to lag, strong labor markets, firming wages, stable energy prices, and improved economic prospects overseas should provide a positive growth environment for U.S. businesses. Most equipment verticals should expect their growth outlook to improve relative to last year:
U.S. credit conditions remain solid overall, with little change from last quarter in consumer and business credit demand, and a slight downtick in credit supply as banks tighten lending standards. Business demand for credit remains generally weak, but may revive over the next two quarters. Meanwhile, growth in consumer credit demand has slowed since last quarter, despite record-high consumer confidence. The Federal Reserve has raised interest rates twice since the last Outlook, and will likely increase rates two or three more times this year.
The U.S. economy appears to be on solid footing, despite an underwhelming finish to 2016 and slow start in 2017. Labor markets remain strong, which underlies healthy consumer spending, gradually accelerating wage growth, and mounting inflationary pressures. Business investment and manufacturing activity continue to lag, but industry confidence indices point to an improved investment picture during the second half of the year. Government spending is likely to have a neutral effect on economic growth this year, while exports may struggle â€” although an improved international growth story may help increase demand for U.S. manufacturing goods. While a strong growth surge is unlikely, the U.S. economy seems to be on track for moderate growth after a sluggish 2016.