Equipment Finance Industry Confidence Eases in December

Washington, DC, December 16, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the December 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 63.9, a decrease from the November index of 64.6.

When asked about the outlook for the future, MCI-EFI survey respondent Daniel J. Krajewski, President and CEO, Sertant Capital, LLC, said, “The near-term future of the equipment finance industry shows promise for continued expansion. As infrastructure bills are passed and implemented there will be a demand for many asset classes from construction through IT platforms. This, of course, will need to be supported by increased manufacturing capacity to build all the required capital goods. I do have concerns about the political atmosphere that currently exists in the U.S. that may slow down or even kill the entire infrastructure bill, and secondly, the supply chain issues that have bottlenecked the product delivery system.”

December 2021 Survey Results:

The overall MCI-EFI is 63.9, a decrease from the November index of 64.6.

  • When asked to assess their business conditions over the next four months, 34.6% of executives responding said they believe business conditions will improve over the next four months, unchanged from November. 61.5% believe business conditions will remain the same over the next four months, up from 46.2% the previous month. 3.9% believe business conditions will worsen, down from 19.2% in November.
  • 26.9% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 42.3% in November. 73.1% believe demand will “remain the same” during the same four-month time period, an increase from 50% the previous month. None believe demand will decline, down from 7.7% in November.
  • 19.2% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 26.9% in November. 80.8% of executives indicate they expect the “same” access to capital to fund business, an increase from 73.1% last month. None expect “less” access to capital, unchanged from the previous month.
  • When asked, 42.3% of the executives report they expect to hire more employees over the next four months, down from 53.9% in November. 57.7% expect no change in headcount over the next four months, an increase from 46.2% last month. None expect to hire fewer employees, unchanged from November.
  • 19.2% of the leadership evaluate the current U.S. economy as “excellent,” an increase from 15.4% the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” down from 80.8% in November. 3.9% evaluate it as “poor,” unchanged from last month.
  • 19.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 23.1% in November. 61.5% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 57.7% last month. 19.2% believe economic conditions in the U.S. will worsen over the next six months, unchanged from the previous month.
  • In December 46.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 42.3% the previous month. 53.9% believe there will be “no change” in business development spending, down from 57.7% in November. None believe there will be a decrease in spending, unchanged from last month.

December 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Middle Ticket
“Demand for capital expenditures remains robust. Customers are looking to mitigate labor shortage challenges with automation. We believe this trend will continue through 2022 and into 2023. Supply chain headwinds continue to frustrate automation plans.” Michael Romanowski, President, Farm Credit Leasing

“Demand for equipment loans and leases remains strong in nearly all sectors. Large U.S. businesses are looking to fixed-rate financing as a strategy to mitigate the impact of inflation.” Alan Sikora, CLFP, CEO, First American, an RBC / City National Company

“Our clients remain resilient, powering though the pandemic, supply chain issues and inflation to meet their objectives. Key remains vigilant that the continued battle against Covid will eventually lessen the risks to our customers and our economy.” Adam Warner, President, Key Equipment Finance

Independent, Middle Ticket
“There is still significant liquidity in the markets and productivity continues to thrive. The impact of inflation and upcoming rate hikes could provide pause, but we continue to see strong demand on capital equipment expenditures. The biggest hurdle is prolonged supply chain disruptions, but it’s encouraging to see organizations transforming to address them innovatively going into 2022.” Aylin Cankardes, President, Rockwell Financial Group

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
Twitter: https://twitter.com/LeaseFoundation
Facebook: https://www.facebook.com/LeaseFoundation
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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.

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Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

2022 Economic Outlook Forecasts 4.6% Expansion in Equipment and Software Investment Growth and 3.5% GDP Growth

Washington, DC, December 15, 2021 – Low financial stress, an expanding housing sector, and increased federal spending on infrastructure are expected to propel equipment and software investment growth of 4.6 percent for 2022. Annual U.S. GDP growth for 2022 is forecast at 3.5 percent, according to the 2022 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation. The Foundation’s report, which is focused on the nearly $1 trillion equipment leasing and finance industry, highlights key trends in equipment investment and places them in the context of the broader U.S. economic climate.

Nancy Pistorio, Foundation Chair and President of Madison Capital LLC, said, “This report provides a thorough examination of the wide range of conditions that will impact the U.S. economy and business investment next year. Despite uncertainty around new Covid variants,  ongoing supply chain issues, and inflation, positive factors should outweigh the headwinds. Robust consumer demand, a strong labor market, and increased equipment and software investment—the lifeblood of the equipment finance industry–look promising. We can look forward to ‘getting back to business’ in 2022, provided supply chain issues ease significantly and the pandemic is effectively curbed.”

Highlights from the 2022 Outlook include:

  • While equipment and software investment is forecast to grow 4.6 percent (annualized) in 2022, supply chain constraints, high inflation, and tighter monetary policy are key headwinds to growth.
  • The U.S. economy slowed in fall 2021 as the pandemic worsened and supply chain constraints snarled global trade and drove inflation to multi-decade highs. However, growth in Q4 has likely rebounded, and the economy appears poised for an above-average year in 2022.
  • The U.S. manufacturing sector should continue to expand at a healthy rate in 2022, although supply chain issues, hiring difficulties, and high inflation could dampen industrial sector output, particularly during the first half of the year.
  • On Main Street, the outlook has grown increasingly cloudy. Small firms are more susceptible to surging input costs and labor scarcity than large firms, which may weigh on small businesses as the new year gets underway. On the positive side, consumer demand remains robust, and the winter months should be smoother this year than last.
  • The Federal Reserve officials recently shifted their positions in response to new data and now acknowledge that inflationary pressures are likely here to stay. The Fed is now expected to end quantitative easing earlier than planned and raise interest rates at least once by mid-2022. Multiple rate hikes are possible in 2022, particularly if job growth stays on track.

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. Eleven verticals are peaking/slowing, and one is accelerating. Over the next three to six months, year over year:

  • Agriculture machinery investment growth will continue to decelerate.
  • Construction machinery investment growth will decelerate, though likely remain in positive territory.
  • Materials handling equipment investment growth should remain positive.
  • All other industrial equipment investment growth should slow.
  • Medical equipment investment growth should remain in positive territory, but will likely decelerate.
  • Mining and oilfield machinery investment growth should stay strong.
  • Aircraft investment growth will continue to decelerate, though remain positive.
  • Ships and boats investment growth is expected to remain in healthy territory.
  • Railroad equipment investment growth is expected to remain strong.
  • Trucks investment growth should remain healthy.
  • Computers investment growth should remain positive, but is unlikely to accelerate.
  • Software investment growth may have peaked, though should remain robust.

The full report of the Momentum Monitor is now available at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

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 report will be updated quarterly throughout 2022.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/. 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 programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.

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Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Leasing & Finance Foundation Elects Officers, Welcomes New Trustees, and Presents Research Award During Annual Meeting

Washington, DC, December 2, 2021 – The Equipment Leasing & Finance Foundation (Foundation) announced the 2022 officers of its Board of Trustees (Board). Board Officers serving are Nancy Pistorio, President, Madison Capital LLC as Chair, and the first woman to hold the position; Zack Marsh, CFO, Orion First Financial, LLC as Vice Chair; Jeffrey Berg, Global Business Unit President – Advanced Solutions, DLL, as Secretary/Treasurer; and Ralph Petta, President and CEO, Equipment Leasing and Finance Association (ELFA) as President. Scott Thacker, Chief Executive Officer, Ivory Consulting Corporation, is Immediate Past Chair.

New members appointed to the Foundation Board of Trustees include Peter Bullen, Executive Vice President, Key Equipment Finance; Mark Loken, Vice President, Credit, Farm Credit Leasing; and Nancy Robles, Chief Operating Officer/Compliance Officer, Eastern Funding LLC.

“The Foundation’s 2022 Board brings a wealth of leadership and industry experience to their roles as Trustees” said Nancy Pistorio. “We are privileged to have such talent, commitment and expertise serving the Foundation and its mission for the advancement of the equipment finance industry.”

Trustees continuing on the Board for 2022 are:

  • Katie Emmel, Chief Operating Officer, Solifi
  • Christopher Enbom, CEO & Chairman, AP Equipment Financing
  • Valerie Gerard, Co-Chief Executive Officer, The Alta Group LLC
  • Miles Herman, President and COO, LEAF Commercial Capital Inc.
  • Shari Lipski, Principal, ECS Financial Services, Inc.
  • Brian Madison, President, TrinityRail Leasing and Management Services
  • William Tefft, SVP Asset Management, Pacific Western Bank
  • Thomas Ware, President, Tom Ware Advisory Services, LLC
  • Bonnie Wright
  • Donna Yanuzzi, Director of Equipment Finance, 1st Equipment Finance

Kelli Nienaber will continue to serve as Executive Director.

Steven R. LeBarron Award
Research Committee Chair Thomas Ware honored James M. Johnson, a Foundation Trustee for more than 25 years and prolific contributor to the body of knowledge of the equipment finance industry, with the Steven R. LeBarron Award for Principled Research. Throughout his 40-year-long involvement with the Foundation, ELFA, and ELFA’s precursors, Johnson cofounded the Journal of Equipment Lease Finance (JELF), contributed 25 articles and continuously served on its Editorial Review Board since its inception, reviewing dozens of articles. He developed and delivered the first Principles of Leasing workshops, and authored two books on “Fundamentals of Finance for Equipment Lessors” with ELFA. This award is presented annually in memory of LeBarron to the Research Committee member who demonstrates the insight, fortitude, and dedication he exemplified.

JOIN THE CONVERSATION
Twitter: https://twitter.com/LeaseFoundation
Facebook: https://www.facebook.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 programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.
###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Finance Industry Confidence Higher in November

Washington, DC, November 18, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the November 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 64.6, an increase from the October index of 61.1.

When asked about the outlook for the future, MCI-EFI survey respondent Dave Fate, Chief Executive Officer, Stonebriar Commercial Finance, said, “While I believe the equipment leasing and finance Industry will always perform well through various cycles, the last few months have shown a number of interesting data points. Strong corporate earnings continue to drive the equity markets. The current rise in Inflation rates is alarming and seems like it will be with us for a while. Continued issues with the lack of skilled and non-skilled labor are the number one concern of most of our customers. Supply chain issues are causing real disruption and seem to have no viable plan to alleviate them. The rest of Q4 and into Q1 will be very interesting as we navigate through year-end closing in our industry and the Christmas holiday season.”

November 2021 Survey Results:
The overall MCI-EFI is 64.6, an increase from the October index of 61.1.

  • When asked to assess their business conditions over the next four months, 34.6% of executives responding said they believe business conditions will improve over the next four months, up from 25.9% in October. 46.2% believe business conditions will remain the same over the next four months, down from 70.4% the previous month. 19.2% believe business conditions will worsen, up from 3.7% in October.
  • 42.3% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 22.2% in October. 50% believe demand will “remain the same” during the same four-month time period, a decrease from 74.1% the previous month. 7.7% believe demand will decline, up from 3.7 in October.
  • 26.9% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.8% in October. 73.1% of executives indicate they expect the “same” access to capital to fund business, a decrease from 85.2% last month. None expect “less” access to capital, unchanged from the previous month.
  • When asked, 53.9% of the executives report they expect to hire more employees over the next four months, up from 40.7% in October. 46.2% expect no change in headcount over the next four months, a decrease from 59.3% last month. None expect to hire fewer employees, unchanged from October.
  • 15.4% of the leadership evaluate the current U.S. economy as “excellent,” an increase from 7.4% the previous month. 80.8% of the leadership evaluate the current U.S. economy as “fair,” down from 81.5% in October. 3.9% evaluate it as “poor,” down from 11.1% last month.
  • 23.1% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 22.2% in October. 57.7% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 63% from last month. 19.2% believe economic conditions in the U.S. will worsen over the next six months, up from 14.8% the previous month.
  • In November 42.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down slightly from 42.9% the previous month. 57.7% believe there will be “no change” in business development spending, up slightly from 57.1% in October. None believe there will be a decrease in spending, unchanged from last month.

November 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Middle Ticket
“We continue to see interest in capital expansion for the sectors we serve, especially with middle market customers. Supply chain issues continue to be a headwind to the implementation of capital investment.” Michael Romanowski, President, Farm Credit Leasing

Independent, Middle Ticket
“Business owners are feeling much more confident and are moving forward with capital acquisitions, some that had been delayed because of the pandemic. Pending no flare up of COVID-19 infections in the coming months, we expect smooth sailing for the next several quarters.” Bruce J. Winter, President, FSG Capital, Inc.

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. U.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
Twitter: https://twitter.com/LeaseFoundation
Facebook: https://www.facebook.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 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.

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Foundation’s 2021 Industry Future Council Identifies Six Key Trends Expected to Impact Equipment Finance Firms Over the Next Five Years

Washington, DC, October 25, 2021 – Today the Equipment Leasing & Finance Foundation (Foundation) releases the 2021 Industry Future Council (IFC) report, “Looking Ahead to the Post-Pandemic Economy: A Strategic Assessment of the Equipment Finance Industry,” which identifies six key inter-related trends in technology, workforce, and economics & policy that are predicted to impact the equipment finance industry during the coming five years. The findings and detailed recommendations in the report are based upon input from IFC members, external research, and Keybridge, an economics research firm selected to facilitate the 2021 IFC. The IFC is comprised of a cross-section of selected industry executives who convened throughout the year to develop the trends.

The IFC explored over 20 possible developments through a combined approach of analysis. The trends below were identified as those six which have the greatest potential to impact the equipment finance sector in a pandemic-recovering and changing economy. Additional research on each of the drivers of change are included in the report.

Technology-Related Trends:

  • Increased Role of Technology in Sales and Business Operations
  • Increased Emphasis on Cyber/Data Security

Workforce-Related Trends:

  • Challenges Recruiting the Next Generation of Equipment Finance Workers
  • Expanding Focus on Promoting Diversity, Equity, and Inclusion

Economic and Policy Trends:

  • Pandemic-Driven Changes to Equipment Demand
  • Increased Regulatory Pressures on the Equipment Finance Sector

Scott Thacker, Foundation Chair and Chief Executive Officer of Ivory Consulting Corporation, said, “Profound changes have occurred in the business world and the broader economy over the last 18 months that will shape the equipment finance industry in the years ahead. This year’s IFC report provides a robust examination of those conditions and the resultant trends that the sector is expected to face, as well as detailed examples and applications to help navigate them. Equipment finance firms that do not consider these changes in their strategic planning and adjust accordingly risk falling behind the competitive curve.”

The 2021 IFC was co-sponsored by Equifax and Solifi, and is available for free download at https://bit.ly/ELFFIFC. All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

JOIN THE CONVERSATION
Twitter: https://twitter.com/LeaseFoundation
Facebook: https://www.facebook.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 programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.

###

Media contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Finance Industry Confidence Steady in October

Washington, DC, October 21, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the October 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 61.1, an increase from the September index of 60.5.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, CLFP, President and CEO, Wintrust Specialty Finance, said, “Business volume is increasing coming out of the summer months, portfolio performance is sound, and we are optimistic for a solid Q4 2021.”

October 2021 Survey Results:
The overall MCI-EFI is 61.1, an increase from the September index of 60.5.

  • When asked to assess their business conditions over the next four months, 25.9% of executives responding said they believe business conditions will improve over the next four months, up from 17.9% in September. 70.4% believe business conditions will remain the same over the next four months, down from 71.4% the previous month. 3.7% believe business conditions will worsen, down from 10.7% in September.
  • 22.2% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 21.4% in September. 74.1% believe demand will “remain the same” during the same four-month time period, a decrease from 75% the previous month. 3.7% believe demand will decline, up from none in September.
  • 14.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 32.1% in September. 85.2% of executives indicate they expect the “same” access to capital to fund business, an increase from 67.9% last month. None expect “less” access to capital, unchanged from the previous month.
  • When asked, 40.7% of the executives report they expect to hire more employees over the next four months, up from 28.6% in September. 59.3% expect no change in headcount over the next four months, a decrease from 71.4% last month. None expect to hire fewer employees, unchanged from September.
  • 7.4% of the leadership evaluate the current U.S. economy as “excellent,” a slight increase from 7.1% the previous month. 81.5% of the leadership evaluate the current U.S. economy as “fair,” down from 92.9% in September. 11.1% evaluate it as “poor,” up from none last month.
  • 22.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 17.9% in September. 63% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 64.3% from last month. 14.8% believe economic conditions in the U.S. will worsen over the next six months, down from 17.9% the previous month.
  • In October 42.9% of respondents indicate they believe their company will increase spending on business development activities during the next six months, 57.1% believe there will be “no change” in business development spending, and none believe there will be a decrease in spending, all unchanged from last month.

October 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Independent, Small Ticket
“I don’t feel a great deal of optimism looking forward. The supply chain bottleneck is likely to improve, and as it does, the general pick-up in the economy will follow.” James D. Jenks, CEO, Global Financing & Leasing Services, LLC

Independent, Middle Ticket
“We have seen strong new business opportunities over the last six months, so while our survey answers are ‘about the same,’ that’s because we have already seen the turn, and this level of activity is, in fact, very strong.” Bruce J. Winter, President, FSG Capital, Inc.

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. U.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
Twitter: https://twitter.com/LeaseFoundation
Facebook: https://www.facebook.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 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.

###

Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Q4 2021 Equipment Leasing & Finance Industry Snapshot Now Available

The Equipment Leasing & Finance Foundation has released the Q4 2021 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 range of details in the new release:
•  Overall, the Foundation projects the U.S. economy will grow by 5.3% in 2021.
•  The U.S. economy expanded at a 6.7% annualized pace in Q2 2021 as business restrictions eased, mobility surged, and consumers unleashed spending across goods and services industries. Growth in Q2 was driven by a surge in consumer spending and business investment.
•  Economic tailwinds for growth this year include:
o   Consumer financial cushion thanks to savings accumulated during the pandemic, which is keeping financial stress low as pandemic-era relief measures like the foreclosure and eviction moratoria expire.
o   Labor demand as a historic demand for workers and relatively low levels of hiring are leading workers to negotiate better pay and working conditions.
•  Economic headwinds include:
o   Stalling consumer mobility with the increase of the Delta variant after a substantially improved spring and early summer. On a positive note, the Delta variant is not expected to depress mobility and spending as much as the virus did last winter.
o  Supply chain pressures across the world due to disruptions from COVID-related travel and work restrictions, especially in East Asian countries. Port closures and backlogs have been particularly disruptive to supply chains, causing major delays and cancellations that are driving up prices.
•  Additional factors to watch include:
o   Fiscal policy uncertainty with Congress engaged in debates on various spending and budget items that carry serious economic, financial, and geopolitical consequences.
o   Concerns of persistently high inflation with historically high expectations among consumers and a significant share of businesses raising prices.
o   The trajectory of the pandemic if, despite the success of vaccines and some level of natural immunity among those recently infected, another surge occurs that would negatively affect consumer confidence and economic activity.
o   Monetary policy with Fed watchers expecting a slow return to tighter policy conditions later this year.
•  Equipment investment growth will likely slow, though remain healthy throughout the rest of 2021. Equipment and software investment is projected to expand by a robust 13.2% in 2021, a strong recovery from last year’s pandemic recession.
•   New business volume growth reported in ELFA’s Monthly Leasing and Finance Index expanded 21% year over year in August. Strong business investment is expected to keep new business volume elevated through the rest of the year, though year-over-year growth may ease somewhat.

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

Media contact: Charlie Visconage, cvisconage@leasefoundation.org

Q4 Update to 2021 Economic Outlook Forecasts 13.2% Expansion in Equipment and Software Investment Growth and 5.3% GDP Growth

Washington, DC, October 13, 2021 – Owing largely to the burst of business activity in the spring and early summer that came in part thanks to rising vaccination rates, annual equipment and software investment growth of 13.2 percent is forecast for 2021, according to the Q4 update to the 2021 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation. Annual U.S. GDP growth for 2021 is forecast at 5.3 percent. The Foundation’s report, which is focused on the nearly $1 trillion equipment leasing and finance industry, highlights key trends in equipment investment and places them in the context of the broader U.S. economic climate.

Scott Thacker, Foundation Chair and Chief Executive Officer of Ivory Consulting Corporation, said, “The Q4 update indicates that optimism eased somewhat as the spread of the COVID-19 Delta variant began weighing on consumer confidence and economic activity. The trajectory of the virus this fall and winter, inflation, and fiscal policy are the most significant unknowns to consider during the upcoming six months. Fortunately, the overall outlook portrayed in the Q4 update is more optimistic than it was a year ago. Businesses continue to invest despite supply chain issues and labor shortages, which bodes well for the equipment finance industry.”

Highlights from the Q4 update to the 2021 Outlook include:

  • Equipment and software investment rose 12.7 percent (annualized) in Q2 and is well above its pre-pandemic level. Business investment has remained strong despite emerging economic headwinds, though these headwinds could begin to weigh on investment later this year.
  • The U.S. economy expanded at a robust 6.7 percent (revised) annualized rate in Q2 2021, about the same pace as in Q1. GDP has now eclipsed its level from the end of 2019, just before the pandemic began.
  • The U.S. manufacturing sector continues to face historically high levels of demand, although growth decelerated over the last quarter. Meanwhile, U.S. industrial output has been constrained by ongoing supply chain issues and high input prices.
  • Business prospects for Main Street have been tempered somewhat since the summer as the resurgence of COVID has reduced consumer mobility, spending, and confidence. Small businesses are also contending with labor shortages, supply chain delays, and inflationary pressures, but are better equipped for headwinds due to healthy lending activity and a slow, steady rise in vaccination rates.
  • Federal Reserve officials largely maintain that ongoing inflationary pressures are mostly temporary. However, officials have signaled that the Fed is ready to begin “tapering” its asset purchases soon, which would translate to tighter financial conditions.
  • The spread of the Delta variant has dampened activity in some areas and has likely slowed economic growth significantly in Q3. Factors to watch for the rest-of-year outlook include concerns of persistently high inflation, uncertainty surrounding fiscal policy, the potential for tighter financial conditions that could impact equity markets, and the trajectory of the pandemic.

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. Eight verticals are showing signs of accelerating investment, and four other verticals are showing signs of peaking. Over the next three to six months, year over year:

  • Agriculture machinery investment growth may ease, though year-over-year growth will likely remain in positive territory.
  • Construction machinery investment growth will stay elevated.
  • Materials handling equipment investment growth should remain robust.
  • All other industrial equipment investment growth should remain elevated.
  • Medical equipment investment growth will likely remain in positive territory.
  • Mining and oilfield machinery investment growth should accelerate.
  • Aircraft investment growth will remain elevated, though may have peaked.
  • Ships and boats investment growth should remain healthy.
  • Railroad equipment investment growth should continue to improve, though upside potential may be limited.
  • Trucks investment growth should remain robust.
  • Computers investment growth should remain in positive territory and may even accelerate.
  • Software investment growth should remain elevated.

The full report of the Momentum Monitor is now available at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

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 Q4 report is the third update to the 2021 Economic Outlook and will be followed by the publication of the 2022 Economic Outlook in December.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/. 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 programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.

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Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Equipment Finance Industry Confidence Eases Again in September

Washington, DC, September 16, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the September 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 60.5, a decrease from the August index of 66.6.

When asked about the outlook for the future, MCI-EFI survey respondent Bruce J. Winter, President, FSG Capital, Inc. said, “The delta variant is causing some slowdown in certain sectors which will delay, but not derail the recovery of these industries. Other sectors that have seen strong demand but were unable to fulfill all orders due to severe labor shortages are optimistic more workers will return now that the federal unemployment bonus has expired. We expect a robust fourth quarter and are optimistic the momentum will continue into early next year. Future inflation remains the great unknown, and the outcome of the proposed $3.5 trillion infrastructure bill will be a key determinate in whether we experience only short-term inflation or several years of inflation well above the Fed’s target rate.”

September 2021 Survey Results:
The overall MCI-EFI is 60.5, a decrease from the August index of 66.6.

  • When asked to assess their business conditions over the next four months, 17.9% of executives responding said they believe business conditions will improve over the next four months, down from 35.7% in August. 71.4% believe business conditions will remain the same over the next four months, up from 64.3% the previous month. 10.7% believe business conditions will worsen, up from none in August.
  • 21.4% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 32.1% in August. 75% believe demand will “remain the same” during the same four-month time period, an increase from 67.9% the previous month. 3.6% believe demand will decline, up from none in August.
  • 32.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 28.6% in August. 67.9% of executives indicate they expect the “same” access to capital to fund business, a decrease from 71.4% last month. None expect “less” access to capital, unchanged from the previous month.
  • When asked, 28.6% of the executives report they expect to hire more employees over the next four months, down from 35.7% in August. 71.4% expect no change in headcount over the next four months, an increase from 64.3% last month. None expect to hire fewer employees, unchanged from August.
  • 7.1% of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 14.3% the previous month. 92.9% of the leadership evaluate the current U.S. economy as “fair,” up from 85.7% in August. None evaluate it as “poor,” unchanged from last month.
  • 17.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 32.1% in August. 64.3% indicate they believe the U.S. economy will “stay the same” over the next six months, unchanged from last month. 17.9% believe economic conditions in the U.S. will worsen over the next six months, up from 3.6% the previous month.
  • In September 42.9% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 50% last month. 57.1% believe there will be “no change” in business development spending, an increase from 50% in August. None believe there will be a decrease in spending, unchanged from last month.

September 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Middle Ticket
“There is great interest in capital expansion in the industries we serve. Supply chain issues continue to delay equipment and the completion of projects. We will see this continue into next year and it will have an impact on when transactions end up on the books.” Michael Romanowski, President, Farm Credit Leasing

Independent, Large Ticket
“We always believe that secured equipment loans and leases will outperform all other asset classes; however, the last few months have created some concern among our customers. The shortage of labor, skilled or otherwise, has become problematic. Uncertainty with prospective polices coming out of Washington that could increase costs of doing business has slowed decision making ahead of any conclusion. Persistence of COVID variants and potentially renewed mandates and restrictions create even more uncertainty. While we try our best not to worry about what we cannot control, this environment feels unprecedented. Until we have clarity on a number of these concerns, we think the rest of this year and into 2022 will be somewhat choppy.” Dave Fate, Chief Executive Officer, Stonebriar Commercial Finance

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.

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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.

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Media Contact: Charlie Visconage, cvisconage@leasefoundation.org

Foundation COVID-19 Impact and Recovery Survey Shows Positive Portfolio Performance and Increased Staffing Levels at Equipment Finance Companies

Washington, DC, September 8, 2021 – The Equipment Leasing & Finance Foundation (Foundation) releases the results of its second quarterly COVID-19 Impact and Recovery Survey today which reveal equipment finance companies’ staffing performance, work-from-home expectations, and portfolio metrics, including deferrals, defaults, and originations. The COVID-19 Impact and Recovery Survey is designed to reflect longer-term effects of the pandemic’s impact on equipment finance companies going forward.

Among the survey highlights:

Staffing:
• Staffing levels are up, even vs. pre-COVID.
• Small-ticket lenders/lessors expect to have 14% more FTEs by January 1, 2022, than they did on January 1, 2020. Two-thirds expect a double-digit increase in staffing.
• Middle-ticket lenders/lessors expect a 7% increase.
• Large-ticket lenders/lessors expect a 5% increase.
• Banks and Independents both expect a 10% increase.
• Captives expect only a 3% increase.

Work from Home (WFH):
• Lenders of all types generally expect to be back in the office by 2022.
• 50% of Banks, 50% of Captives and 39% of Independents expect 0% or 10% WFH in 2022.
• Only 5% of Banks, 13% of Captives and 22% of Independents expect WFH to substantially continue for 75% or more of their employees.
• Overall, on average, 69% of staff were WFH at the beginning of 2021, and respondents expected more than half of those WFH to return to the office by beginning of 2022, reducing WFH to 31%.

Deferrals:
• At the peak of deferrals, lenders had about 8% of their portfolio in deferral. Overall deferrals are now down to 1.7%; for banks deferrals are down to 0.6%, Independents 3%, and Captives 8%.
• 10% of lenders never had any deferrals.
• 55% have no deferrals currently.
• 25% of lenders are still at their peak deferral percentage.

Defaults:
• Overall, default rates in 2021 are expected to be well below 2020 levels, and even below 2019 levels.
• Large ticket expectations for the 2021 default rate are even with 2019, at 0.17%
• Middle ticket expects 0.22%, well below the 0.38% seen in 2020.
• Small ticket expects a 0.37% default rate this year, not much more than half of 0.67% in 2020, and well below 0.58% in 2019.

Originations:
• Captives expect a 22% increase in originations in 2021 vs. 2019, the largest increase of any lender type. However, Captives saw a 14% decrease in 2020, as compared to 2019, so net growth over the two-year period would only be 4%
• Banks are expected to have double-digit growth in 2020 and 2021, amounting to 25% over the two-year period.
• Independents were flat in 2020, but expect to be up 17% in 2021.

“The data in the COVID-19 Impact and Recovery Survey provide valuable insights of industry performance by lender type and ticket size for companies to gauge their own results,” said Tom Ware, Foundation Trustee and Research Committee Chair. “Overall, the equipment finance industry appears to be coming through the pandemic stronger than ever, as indicated by metrics including expanding portfolios, positive portfolio performance and increases in new hires.”

COVID-19 Impact and Recovery Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“In the short term, the world-wide economy is recovering from the global pandemic of COVID-19. This means confidence in the stability of the markets is slowly recovering as supply chains slowly find a new path to stability. This directly affects the supply of commercial assets and their values. I think we will continue under these conditions through at least the end of 2021.    Mid-term I think we will see pent-up demand released as product becomes available. Long-term, our industry will continue to adapt to new technologies, regulation, employee desires and customer needs to thrive. I believe the best is in front of us if we continue to innovate with broad vision and courage.” David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Independent, Small Ticket
“While the pandemic negatively impacted equipment finance originations in many market segments, as we begin to emerge from COVID restrictions and economic uncertainty, many businesses will be feeling more confident about capital spending and taking on additional debt.  This should result in a notable increase in demand for our industry’s products and services over the next 18 months.” Nancy Pistorio, President, Madison Capital, LLC

“I see some slowdown as companies are assessing their needs and trying to determine their office space needs with employees now working out of office.” Steven Geller, Manager, Leasing Solutions, LLC

Bank, Middle Ticket
“Going forward I see our segment growing in the near and long-term future. I think near term we will continue to grapple with supply chain  delays, but the need for financing will stay constant.” Marci Slagle, CLFP, President, BankFinancial, NA

Survey responses were collected from 64 equipment finance company executives from July 1-29, 2021. Results are available online at https://www.leasefoundation.org/industry-resources/covid-impact-recovery-survey/. 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 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.
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Media contact: Charlie Visconage, cvisconage@leasefoundation.org