Q3 Update to the 2024 Economic Outlook Forecasts 3.7% Expansion in Equipment and Software Investment, 2.3% GDP Growth

Washington, DC, July 17, 2024 – Midway through the year, the outlook for a soft landing has strengthened, driven by easing inflation and a robust labor market, according to the Q3 update of the 2024 Equipment Leasing & Finance U.S. Economic Outlook. Real equipment and software investment growth is projected to be 3.7% in 2024, with activity expected to pick up later in the year after the Fed lowers interest rates. The report, which was prepared by Keybridge and released today by the Equipment Leasing & Finance Foundation, also forecasts real GDP growth of 2.3% this year, unchanged from the Foundation’s Q2 update to the 2024 Economic Outlook published in April.

The Foundation’s report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate.

Leigh Lytle, President of the Foundation, and President & CEO of the Equipment Leasing and Finance Association, said, “The economy is poised to stick the soft landing according to the Foundation’s Q3 economic outlook. Inflationary pressures are easing, which should allow the Fed to lower rates at least once in 2024. An easing Fed means lower borrowing costs, a welcomed development for households who are feeling financially strained and businesses looking to invest. That latter point is important as our latest Momentum Monitor suggests that investment in the equipment finance industry may be uneven over the second half of the year. Overall, we expect equipment and software investment to continue to expand at a moderate pace in 2024.”

Highlights from the Q3 update to the 2024 Outlook include:

  • Equipment investment expanded in Q1 after contracting for three quarters in 2023. Transportation equipment investment remains in negative territory, while information processing equipment and software investment lead growth, driven in part by AI-related investment. Industrial equipment also expanded at a healthy rate.
  • At the year’s midway point, the U.S. economy is a mixed bag. On the positive side, the labor market remains healthy, wage growth is solid, and the Fed continues to make progress against inflation. At the same time, consumer demand is slowing for several reasons, including weaker disposable income growth, “inflation fatigue,” and rising financial stress. Business activity also appears to be slowing, both in the manufacturing sector as well as service sector industries as consumers tighten their belts. Overall, a recession in 2024 remains unlikely, but breakout growth is also unlikely. A soft landing looks like the best bet.
  • The manufacturing sector is expected to remain soft over the next few months. After cresting briefly into expansionary territory in March, ISM’s Manufacturing PMI, a key indicator of sector performance, has declined for three consecutive months. Industrial production held steady, but many manufacturers appear hesitant to invest in capital expenditures and inventories given the current business environment.
  • Optimism on Main Street has improved marginally as inflation has eased. Small business owners are still feeling the pinch of high interest rates and inflation, however, as rents rise 12% year over year and consumer demand slows. In line with overall economic growth, Main Street economic activity is expected to expand modestly over the remainder of the year.
  • Inflation cooled in Q2, a welcome development after multiple too-hot-for-comfort readings earlier in the year. While it’s too soon to declare victory, inflation should remain subdued over the next few months given softening demand and the increased prevalence of price discounts. As a result, we expect the Fed to cut rates twice in 2024.

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. This month five verticals are expanding, two are peaking, two are recovering, and three are weakening. Over the next three to six months the Foundation expects the following trends to materialize on a year-over-year basis:

  • Agriculture machinery investment growth should remain strongly positive.
  • Construction machinery investment growth is likely to contract.
  • Materials handling equipment investment growth will weaken and could turn negative.
  • All other industrial equipment investment growth may begin to improve.
  • Medical equipment investment will weaken and may turn negative.
  • Mining and oilfield machinery investment growth will remain negative.
  • Aircraft investment growth should improve.
  • Ships and boats investment growth may have bottomed out, but is unlikely to turn positive.
  • Railroad equipment investment growth should remain steady.
  • Trucks investment growth should improve.
  • Computers investment growth should strengthen.
  • Software investment growth is likely to remain solid.

The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides the U.S. macroeconomic outlook, credit market conditions, and key economic indicators. The Q3 report is the second update to the 2024 Economic Outlook, and will be followed by one more quarterly update before the publication of the 2025 Economic Outlook in December.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/.

Download the Momentum Monitor at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

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ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Foundation Announces Scholarship Awards to 10 Students

Washington, DC, July 16, 2024–The Equipment Leasing & Finance Foundation (Foundation) announces that 10 outstanding students are recipients of The Equipment Leasing & Finance Foundation Scholarship, a program for students interested in potentially pursuing a career in the equipment finance industry. Each student will receive a scholarship of $5,000 for the 2024-2025 academic year. The Equipment Leasing & Finance Foundation Scholarship is part of the Foundation’s Campus to Career Academic Outreach Program. Since its launch in 2020, the number of scholarships awarded has grown from three to 10 this year.

The scholarship recipients are:

  • Miranda Borgemoen, an MBA student at the University of Minnesota specializing in international business and management. Set to graduate in 2027, she is currently working in sales at DLL and hopes to use this scholarship grant to grow professionally and further advance her career in equipment finance.
  • Jude Butumbi, a rising junior majoring in accounting at Lincoln University of Pennsylvania. He intends to pursue a career in equipment finance with a focus on innovation around blockchain and AI. He is a recent participant in the CLFP micro-certification program.
  • Paige Etris, a rising junior at Towson University in Maryland studying business administration and marketing. With a passion for relationship building, she wishes to pursue a career in finance and is excited about the opportunities available in equipment finance.
  • Easton Fleck, studying global business leadership with a minor in communications at Saint John’s University in Minnesota. Set to graduate in May 2026, he is focused on a career in business with a specific interest in international markets, strategic management, and financial analysis.
  • Noah O’Rourke, a freshman at the University of Arkansas. Recently an equipment finance intern at Arvest Bank, he looks forward to learning more about the industry as part of his academic career.
  • Andrew Polun, a rising junior at Towson University in Maryland studying accounting. Graduating in May 2025, he is the president of the Towson University Investment Group and a summer investment banking intern at Evergreen Advisors.
  • Zahar Rosinsky, a finance student at Northeastern State University in Oklahoma. Set to graduate in May 2025, he is passionate about promoting sustainable energy solutions and is seeking to expand his skills in business strategy, finance, and entrepreneurship.
  • Megha Shah, a graduate student at the Thunderbird School of Global Management at Arizona State University. Graduating in May 2025, she has experience working in banking, fintech, and logistics.
  • Sydney Smith, a rising junior at Howard University in Washington, DC majoring in finance and business. She is excited about the entrepreneurial opportunities available in the equipment finance industry.
  • Giancarlo Voltolina, studying business administration at the University of North Carolina Chapel Hill. Set to graduate in May 2026, he recently completed an internship at Nexseer Capital and is interning this summer at SPX Technologies.

“I’m honored to congratulate this year’s Foundation scholarship recipients and excited to support them in their academic pursuits,” said Zack Marsh, Chair of the Equipment Leasing & Finance Foundation and SVP, Accounting and Analysis, AP Equipment Financing. “The increased number of scholarships this year reflects the Foundation’s strong commitment to developing future talent for our industry, and are made possible through the generous support of Foundation donors.”

The Foundation scholarship program is an outgrowth of the success of the Foundation’s Campus to Career Presentation Program, an integral component of its Academic Outreach Program, in which industry professionals volunteer to lecture at colleges and universities about the equipment finance industry and its possible career paths.

To learn more or to apply for a scholarship, visit https://www.leasefoundation.org/academic-programs/home/scholarship-program/

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 ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.

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Media contact: Kelli Nienaber, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Steady in June

Washington, DC, June 20, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the June 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 50.2, steady with the May index of 50.7.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance, said, “The stress the industry is experiencing in small business lending continues with elevated bankruptcy, delinquency, and a softening of credit quality. It is important to remember during these times that well-positioned businesses actually grow, take share of wallet, and expand. Our industry is well positioned to help continue the success of these businesses, as well as help those struggling through a rough time in the economy. I am optimistic that in a couple of years we will look back and recognize the positive impact we were able to have on the economy and the small business community.”

June 2024 Survey Results:
The overall MCI-EFI is 50.2, steady with the May index of 50.7.

  • When asked to assess their business conditions over the next four months, 11.5% of the executives responding said they believe business conditions will improve over the next four months, relatively unchanged from 11.1% in May. 76.9% believe business conditions will remain the same over the next four months, down from 77.8% the previous month. 11.5% believe business conditions will worsen, also relatively unchanged from May.
  • 7.4% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 11.1% in May. 77.8% believe demand will “remain the same” during the same four-month time period, down from 81.5% the previous month. 14.8% believe demand will decline, an increase from 7.4% in May.
  • 19.2% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.8% in May. 73.1% of executives indicate they expect the “same” access to capital to fund business, down from 77.8% last month. 7.7% expect “less” access to capital, relatively unchanged from the previous month.
  • When asked, 25.9% of the executives report they expect to hire more employees over the next four months, an increase from 22.2% in 66.6% expect no change in headcount over the next four months, down from 74.1% last month. 7.4% expect to hire fewer employees, up from 3.7% in May.
  • 3.9% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” down from 85.2% in May. 19.2% evaluate it as “poor,” up from 14.8% last month.
  • 14.8% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 7.4% in May. 48.2% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 63% last month. 37% believe economic conditions in the U.S. will worsen over the next six months, an increase from 29.6% the previous month.
  • In June, 14.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 11.1% the previous month. 77.8% believe there will be “no change” in business development spending, down from 81.5% in May. 7.4% believe there will be a decrease in spending, unchanged from last month.

June 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“I’m a believer that we can control our own optimism by recognizing where opportunities lie, asking what customers want, and then creating a realistic plan and executing it with a frequent follow-up process.” Donna Yanuzzi, EVP, 1st Equipment Finance, Inc. (FNCB Bank)

Independent, Large Ticket
“Optimism is based on business initiatives to invest in new technologies and applications, but I believe, at a macro level, the headwinds are stronger than the tailwinds at the moment.” Jonathan Albin, Chief Operating Officer, Nexseer Capital

“The continuation of supply chain issues has led to further delay of new equipment deliveries, putting additional pressure on supply of equipment in our verticals relative to market demand.” Glenn Davis, CEO, RESIDCO

How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/. Details about the MCI, including who participates, how it’s designed, and the survey respondent demographics are also available at the link above.

JOIN THE CONVERSATION
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 ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Lower in May

Washington, DC, May 16, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the May 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 50.7, a decrease from the April index of 52.9.

When asked about the outlook for the future, MCI-EFI survey respondent Bruce J. Winter, President, FSG Capital, Inc., said, “This year, the story of our industry centers on the availability of funding, creating a world of ‘haves’ versus ‘have nots.’ Undoubtedly some active funders today will become ‘have nots’ as their traditional funding mechanisms change. This will create substantial opportunities for strong and experienced participants to pick up not only market share, but more importantly, key personnel that have become displaced from their historical employers. Making the right move(s) now in this time of market disruption will allow these entities to grow and diversify their businesses while others are unable.”

May 2024 Survey Results:
The overall MCI-EFI is 50.7, a decrease from the April index of 52.9.

  • When asked to assess their business conditions over the next four months, 11.1% of the executives responding said they believe business conditions will improve over the next four months, a slight increase from 10.7% in April. 77.8% believe business conditions will remain the same over the next four months, down from 85.7% the previous month. 11.1% believe business conditions will worsen, an increase from 3.6% in April.
  • 11.1% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 7.1% in April. 81.5% believe demand will “remain the same” during the same four-month time period, down from 92.9% the previous month. 7.4% believe demand will decline, an increase from none in April.
  • 14.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 14.3% in April. 77.8% of executives indicate they expect the “same” access to capital to fund business, up from 71.4% last month. 7.4% expect “less” access to capital, down from 14.3% the previous month.
  • When asked, 22.2% of the executives report they expect to hire more employees over the next four months, an increase from 17.9% in 74.1% expect no change in headcount over the next four months, up from 71.4% last month. 3.7% expect to hire fewer employees, down from 10.7% in April.
  • None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 85.2% of the leadership evaluate the current U.S. economy as “fair,” down from 92.9% in April. 14.8% evaluate it as “poor,” up from 7.1% last month.
  • 7.4% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 17.9% in April. 63% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 71.4% last month. 29.6% believe economic conditions in the U.S. will worsen over the next six months, an increase from 10.7% the previous month.
  • In May, 11.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 17.9% the previous month. 81.5% believe there will be “no change” in business development spending, up from 78.6% in April. 7.4% believe there will be a decrease in spending, up from 3.6% last month.

May 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Businesses will always need equipment. There may be a few less buyers, but in times like these there is less competition as lenders pull back so it evens out. Having a strong sales team to find those buyers and the right program structure to attract those buyers is key.” Donna Yanuzzi, EVP, 1st Equipment Finance, Inc. (FNCB Bank)

Bank, Middle Ticket
“The delay of expected or hoped-for interest rate reductions seems to be leading some entities to reconsider capital projects. To date, volume and credit quality have held up, but it’s not clear what the future will hold.” Jason Lueders, President, Farm Credit Leasing

How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/. Details about the MCI, including who participates, how it’s designed, and the survey respondent demographics are also available at the link above.

JOIN THE CONVERSATION
X: https://twitter.com/LeaseFoundation
LinkedIn: https://www.linkedin.com/company/10989281/
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ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Q2 2024 Equipment Leasing & Finance Industry Snapshot Now Available

The Equipment Leasing & Finance Foundation has released the Q2 2024 Equipment Leasing & Finance Industry Snapshot, an indispensable information resource for industry participants. Designed for use in executive briefings and presentations, the presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry with clear, easy-to-digest charts and short narratives of key trends.

Among the wide range of details in the Q2 2024 Snapshot:

  • The Foundation projects that the U.S. economy will grow by 2.3%.
    • The U.S. economy had another strong quarter in Q4 2023 with 3.4% SAAR growth. Consumer and government spending boosted growth and investment, while the labor market remained strong.
    • Both job growth and consumer spending are expected to slow in 2024, but remain healthy while inflation inches toward the Fed’s 2% target over the course of the year.
  • Economic tailwinds include:
    • Easing energy prices have put downward pressure on inflation over the last year due to record-high U.S. production levels for both oil and natural gas. Though oil prices have been more turbulent, prices may soon start on a path of gradual decline given softening global demand projections.
    • Job growth continued in Q1, while wage growth outpaced inflation. The labor market remains the U.S. economy’s strongest tailwind, and appears to be at lower risk of overheating, which is a positive sign for containing inflation.
  • Economic headwinds include:
    • Softening new vehicle sales are a sign that consumer spending appears likely to slow this year. On the bright side, reduced demand may lead to lower prices.
    • Sluggish global economic growth as the IMF forecasts 2024 global growth of 3.1%. This is slightly lower than 2023 and well below the historical average, with challenges particularly acute in the Eurozone and China. Geopolitical conflict remains a risk, and has significant implications for energy markets and global supply chains.
  • A factor to watch is a consumer spending slowdown.
    • Consumer demand has been robust over the last four years, driving the U.S. economic recovery.
    • Spending growth is catching up with income growth, driving the personal savings rate downward. Meanwhile, revolving debt is rising quickly, and student loan payments have now resumed.
    • A spending slowdown appears to be inevitable, but strong job and wage growth may result in a more gradual decline.
  • Equipment and software investment is expected to grow at a 2.2% pace in 2024.
    • E&S investment expanded 3.2% (annualized) in Q4 % after shrinking 0.3% in Q3. Elevated interest rates will continue to drag on investment in 2024, and the climate for near-term investment is still relatively weak.
    • Business investment expanded at a 3.7% annualized pace in Q4 driven by growth in non-residential structures investment, and accelerating from a weak 1.4% in Q3.
  • New business volume growth reported in ELFA’s Monthly Leasing and Finance Index was up 4.9% year to date in February, outpacing the rate of inflation. On a nominal basis, year-over-year growth in new business volume was positive in January and February.

Prepared by Keybridge Research and updated quarterly, the snapshot is available for free download at https://www.leasefoundation.org/industry-resources/industry-snapshot/

Media contact: Kelli Nienaber, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Eases in April

Washington, DC, April 18, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the April 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 52.9, the second highest index in the last two years after last month’s index of 55.2.

When asked about the outlook for the future, MCI-EFI survey respondent Mark Bonanno, President and Chief Operating Officer, North Mill Equipment Finance, said, “Monetary policy has not been as effective in taming inflation that recently came in at an annual rate of 3.2%. The U.S. government as well as the consumer (via credit cards) have unsustainable debt levels, and that will eventually cause cracks in the economy.”

April 2024 Survey Results:
The overall MCI-EFI is 52.9, a decrease from the March index of 55.2.

  • When asked to assess their business conditions over the next four months, 10.7% of the executives responding said they believe business conditions will improve over the next four months, a decrease from 19.4% in March. 85.7% believe business conditions will remain the same over the next four months, up from 77.4% the previous month. 3.6% believe business conditions will worsen, relatively unchanged from 3.2% in March.
  • 7.1% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 25.8% in March. 92.9% believe demand will “remain the same” during the same four-month time period, up from 71% the previous month. None believe demand will decline, a decrease from 3.2% in March.
  • 14.3% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 16.1% in March. 71.4% of executives indicate they expect the “same” access to capital to fund business, down from 74.2% last month. 14.3% expect “less” access to capital, up from 9.7% the previous month.
  • When asked, 17.9% of the executives report they expect to hire more employees over the next four months, a decrease from 19.4% in 71.4% expect no change in headcount over the next four months, up from 67.7% last month. 10.7% expect to hire fewer employees, down from 12.9% in March.
  • None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 92.9% of the leadership evaluate the current U.S. economy as “fair,” down from 93.6% in March. 7.1% evaluate it as “poor,” up from 6.5% last month.
  • 17.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 25.8% in March. 71.4% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 54.8% last month. 10.7% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 19.4% the previous month.
  • In April, 17.9% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 22.6% the previous month. 78.6% believe there will be “no change” in business development spending, up from 64.5% in March. 3.6% believe there will be a decrease in spending, down from 12.9% last month.

April 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Middle Ticket
“Our business is focused on agriculture and rural America. In many cases, ag producer profitability is down or expected to be down compared to the levels of recent years. This situation could make the cash flow and liquidity preservation benefits of a lease more attractive and valuable than they have been. The offset is that credit quality may be more of a challenge, but we expect it to remain quite manageable.” Jason Lueders, President, Farm Credit Leasing

Independent, Small Ticket
“The overspending by the Federal government is contributing greatly to driving up inflation.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC

How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/. Details about the MCI, including who participates, how it’s designed, and the survey respondent demographics are also available at the link above.

JOIN THE CONVERSATION
X: https://twitter.com/LeaseFoundation
LinkedIn: https://www.linkedin.com/company/10989281/
Vimeo: https://vimeo.com/elffchannel

ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org

###

Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Q2 Update to the 2024 Economic Outlook Forecasts 2.2% Expansion in Equipment and Software Investment, 2.3% GDP Growth

Washington, DC, April 17, 2024 – Driven by strong consumer spending and a resilient labor market, the U.S. economy continues to expand at a healthy clip, according to the Q2 update of the 2024 Equipment Leasing & Finance U.S. Economic Outlook. Real equipment and software investment growth is projected to be 2.2% in 2024, with activity expected to pick up in the latter half of the year. The report, which was prepared by Keybridge and released today by the Equipment Leasing & Finance Foundation, also forecasts real GDP growth of 2.3% this year, an improvement over the 1.7% growth forecasted in the Foundation’s 2024 Economic Outlook published last December.

The Foundation’s report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate.

Leigh Lytle, President of the Foundation, and President & CEO of the Equipment Leasing and Finance Association, said, “The Foundation’s Q2 Outlook shows that the ‘soft landing’ appears to be on track. Although equipment and software investment has been weak across most verticals over the last year, activity is expected to pick up as the year goes on, consistent with recent releases of the Foundation’s Momentum Monitors and Monthly Confidence Index. The Fed is likely to be cautious about rate cuts, particularly given recent backtracking on inflation, but we still expect borrowing costs to fall later this year.”

Highlights from the Q2 update to the 2024 Outlook include:

  • Equipment investment was negative for the second consecutive quarter, but continued strength in software investment led to overall E&S growth of 3.2% (annualized) in Q4. Economic conditions are generally positive, however, and a modest improvement in investment activity is expected later this year.
  • The U.S. economy continues to hum, driven by solid consumer spending and surprisingly robust job growth. Borrowing costs and year-to-date inflation remain elevated, however, putting pressure on U.S. consumers and raising the potential for a spending slowdown later this year. Meanwhile, a sluggish global economy may reduce business investment and demand for U.S. exports. For now, though, the Foundation expects both job growth and consumer spending to slow but remain healthy while inflation continues along its bumpy path toward the Fed’s 2% target.
  • Overall manufacturing activity remains soft in early 2024. Both industry production and capacity utilization have trended downward for most of the last 18 months, and manufacturing hours worked is near its lowest point since 2010 (excluding the pandemic’s peak). One potential bright spot is the ISM Purchasing Managers Index, which moved back into expansion territory in March.
  • Despite a general consensus that the U.S. economy remains on track for a soft landing, small business owners have a somewhat pessimistic outlook. Concerns regarding inflation are heightened, and both hiring and investment plans have slowed.
  • The Federal Reserve remains cautious, further delaying its long-awaited rate cut cycle in March, as progress toward its 2% target stalled in Q1. With job growth still robust, Fed officials are unlikely to begin cutting rates until this summer or fall. Two rate cuts in 2024 are the most likely outcome.

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. This month five verticals are expanding, two are recovering, three are weakening, and two are “on the line” between expanding and recovering. Over the next three to six months the Foundation expects the following trends to materialize on a year-over-year basis:

  • Agriculture machinery investment growth is expected to improve.
  • Construction machinery investment growth may improve.
  • Materials handling equipment investment growth should remain relatively flat.
  • All other industrial equipment investment growth is unlikely to improve and may worsen.
  • Medical equipment investment should strengthen.
  • Mining and oilfield machinery investment growth is likely to weaken.
  • Aircraft investment growth is unlikely to change significantly.
  • Ships and boats investment growth may improve modestly.
  • Railroad equipment investment growth is unlikely to change significantly.
  • Trucks investment growth has the potential to improve but is likely to remain relatively flat
  • Computers investment growth should strengthen.
  • Software investment growth should remain steady.

The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides the U.S. macroeconomic outlook, credit market conditions, and key economic indicators. The Q2 report is the first update to the 2024 Economic Outlook, and will be followed by two more quarterly updates before the publication of the 2025 Economic Outlook in December.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/.

Download the Momentum Monitor at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

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ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

New Foundation Study Offers In-Depth Examination of Surging Growth Opportunities in Climate Finance

Washington, DC, March 26, 2024 – An accelerated shift in government policy, corporate policy, and capital deployment strategy are precipitating enormous investment that is driving global growth in climate finance to an estimated $9 trillion by 2030. A new study, “Climate Finance: A Massive Commercial Opportunity for Equipment Finance,” released by the Equipment Leasing & Finance Foundation (Foundation) provides an overview of the climate finance opportunity by industry and asset type, reviews the current nature of financing by equipment finance companies, and provides a roadmap for industry participants to chart their course in climate finance.

The comprehensive study was commissioned by the Foundation and prepared by The Alta Group. It utilizes a multipronged approach, including a compilation of available market data, a survey of members of the Equipment Leasing and Finance Association’s Climate Finance Working Group, and in-depth interviews with participants in climate finance across the equipment finance industry.

Among the in-depth research and analysis in the study are:

  • Executive summary intended to be a stand-alone document summarizing all the content in the paper.
  • Overview of the global climate finance market.
  • Review of participation In climate finance across the industry today and examination of key segments, including solar finance, energy efficiency, electric vehicles (EV), energy storage, and green hydrogen.
  • Information and resources to aid in the analysis of market considerations.
  • Asset management and risk considerations.
  • Current headwinds and tailwinds in climate finance.

“Taking advantage of the sizable opportunities of providing climate finance involves the application of best practices and the mitigation of both traditional and emerging risks,” said Valerie Gerard, Foundation Research Committee Chair and Co-CEO of The Alta Group. “This study aims to accelerate the equipment finance industry’s understanding of climate finance, and offers a roadmap for equipment finance companies to develop their own strategic and tactical plans toward successfully participating in this market.”

Download the full report at https://tinyurl.com/ELFFClimateFin.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

JOIN THE CONVERSATION
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 ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.

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Media contact: Kelli Nienaber, knienaber@leasefoundation.org

 

 

Equipment Finance Industry Confidence Up Third Consecutive Month in March

Washington, DC, March 21, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the March 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market increased for the third consecutive month to 55.2, up from the February index of 51.7, and the highest level since April 2022.

When asked about the outlook for the future, MCI-EFI survey respondent Keith Smith, President, Equipment & Franchise Finance, Star Hill Financial LLC, said, “Supply chain and demand seemed to have caught up to each other, we are finally seeing equipment ordered and delivered in real time. This has increased the overall activity in the equipment funding space. My biggest concern is the volatility the financial markets, specifically the health of mid-market/regional banks. Historically these institutions have been the backbone of funding in the equipment finance industry, and right now even the deposit-healthy institutions are slowing their lending due to regulatory concerns.”

 March 2024 Survey Results:
The overall MCI-EFI is 55.2, an increase from the February index of 51.7.

  • When asked to assess their business conditions over the next four months, 19.4% of the executives responding said they believe business conditions will improve over the next four months, an increase from 10.7% in February. 77.4% believe business conditions will remain the same over the next four months, down from 82.1% the previous month. 3.2% believe business conditions will worsen, a decrease from 7.1% in February.
  • 25.8% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 7.1% in February. 71% believe demand will “remain the same” during the same four-month time period, down from 78.6% the previous month. 3.2% believe demand will decline, a decrease from 14.3% in February.
  • 16.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.3% in February. 74.2% of executives indicate they expect the “same” access to capital to fund business, down from 75% last month. 9.7% expect “less” access to capital, down from 10.7% the previous month.
  • When asked, 19.4% of the executives report they expect to hire more employees over the next four months, a decrease from 21.4% in February.7% expect no change in headcount over the next four months, down from 71.4% last month. 12.9% expect to hire fewer employees, up from 7.1% in February.
  • None of the leadership evaluate the current U.S. economy as “excellent,” down from 3.6% the previous month. 93.6% of the leadership evaluate the current U.S. economy as “fair,” up from 89.3% in February. 6.5% evaluate it as “poor,” down from 7.1% last month.
  • 25.8% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 17.9% in February. 54.8% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 67.9% last month. 19.4% believe economic conditions in the U.S. will worsen over the next six months, an increase from 14.3% the previous month.
  • In March, 22.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 21.4% the previous month. 64.5% believe there will be “no change” in business development spending, down from 67.9% in February. 12.9% believe there will be a decrease in spending, up from 10.7% last month.

March 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“The borrowers that have navigated through the uncertain economic conditions and higher rates should emerge even stronger as the economy strengthens.” Charles Jones, Senior Vice President, 1st Equipment Finance, Inc. (FNCB Bank)  

“I continue to think that 2024 will be a solid growth year for Wintrust Specialty Finance. The year has started off strong with new business originations at double-digit increases over the same period in 2023. Application volume continues to be strong while approval rates are lower due to lower credit quality we are seeing in the market. Portfolio performance remains heightened from recent years and still performing favorably to historic averages. It is important to remain focused on quality and portfolio performance as we wade our way through the transition in the economy.” David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance

Bank, Middle Ticket
“The normalization of income in the grains and oilseeds sector of production agriculture has the potential to increase demand for financing. It will also increase credit risk, albeit from exceptionally strong levels.” Jason Lueders, President, Farm Credit Leasing

Captive, Small Ticket
“Inventories are returning to pre-COVID levels and end users need to replace older equipment they were forced to keep in service. A stabilizing rate environment and an election coming up could make 2024 a very good year.” Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc.

Independent, Large Ticket
“I expect conditions to remain stable for the balance of the year due to the upcoming election and the anticipation for interest rates to decrease.” Jonathan Albin, Chief Operating Officer, Nexseer Capital

Independent, Small Ticket
“The net jobs growth is now relatively weak and there are fewer job openings. The Fed may have, or is near, achieving a ‘soft’ landing with the economy.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC

ABOUT THE MCI

Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment, and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.

 

Who participates in the MCI-EFI?
The respondents are comprised of a wide cross-section of industry executives, including large-ticket, middle-market and small-ticket banks, independents, and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry’s confidence.

How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:

  1. Current business conditions
  2. Expected product demand over the next four months
  3. Access to capital over the next four months
  4. Future employment conditions
  5. Evaluation of the current U.S. economy
  6. S. economic conditions over the next six months
  7. Business development spending expectations
  8. Open-ended question for comment

How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/, included in the Foundation Forecast eNewsletter, and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.

JOIN THE CONVERSATION
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ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Foundation Celebrates Inaugural Equipment Finance Course at ASU

Washington, DC, March 19, 2024—The Equipment Leasing & Finance Foundation celebrated a milestone in its new partnership with the W. P. Carey School of Business at Arizona State University in developing a first-of-its-kind equipment finance course curriculum. Twenty-four students—a number that is significantly above average for a new course—are registered for the inaugural spring semester new elective course focused on credit analysis and equipment leasing.

On March 19, students, along with ASU faculty, were invited to further their classroom learning and have an opportunity to meet and network with industry professionals during the Small Business Lending Forum hosted by Orion First in Phoenix. In addition to welcoming ASU students and faculty, the event sponsors selected the ASU equipment finance program as the recipient of a charitable donation raised from the event.

The Foundation/ASU partnership was initiated and led by equipment finance industry veteran and distinguished ASU alumnus Fred Van Etten, President of Midland Equipment Finance. Van Etten is a long-time, dedicated supporter of both the Foundation and ASU, and was inducted into the W. P. Carey School of Business 2023 Hall of Fame class.

“As the equipment finance industry has evolved and matured, it became obvious to me that educational support and rigor around the discipline at the college level was essentially non-existent,” he says. “Understanding the Foundation’s commitment to developing future industry talent and my experience with the academic resources available at ASU, the potential of bringing these two organizations was irresistible for me.”

The equipment finance curriculum is being developed at the direction of Dr. Laura Lindsey, Department of Finance Chair and the Cutler Family Endowed Professor. “We firmly believe that this innovative program will provide students with education and training that directly meets industry needs, bridging the gap between academia and real-world application,” she says. “This will facilitate a smooth transition for graduates who opt to pursue careers in this field.”

The next phase of the program will be to expand to a series of courses incorporating the finance elective, lease accounting, and additional coursework in sales and marketing. The goal is to launch a full certificate program in equipment finance by the 2026-27 academic year.

The W. P. Carey School of Business partnership is part of the Foundation‘s Campus to Career NextGen talent development programs, which are designed to fulfill the need for the equipment finance industry to attract the future workforce and to be intentional about diversity, equity, and inclusion efforts in recruiting. Other programs include the Foundation scholarship program of ten $5,000 student scholarships, industry volunteer presentations at colleges and universities, and internship listings and resources to connect students and employers.

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ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.

ABOUT THE W. P. CAREY SCHOOL OF BUSINESS

The W. P. Carey School of Business at Arizona State University is the largest and one of the top-ranked business schools in the United States. The school is internationally regarded for its research productivity and distinguished faculty members. Students come from more than 100 countries, and W. P. Carey is represented by alums in over 160 countries. Visit wpcarey.asu.edu.

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org