Q2 2021 Equipment Leasing & Finance Industry Snapshot now available

The Equipment Leasing & Finance Foundation has released the Q2 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:
• The U.S. economy expanded at a 4.3% annualized pace in Q4 2020, but was still 2.4% below its level at the end of 2019. Growth in Q4 was driven by robust business investment, residential investment, and consumer spending.

• Overall, the Foundation projects the U.S. economy will grow by 5.7% in 2021.

• Economic tailwinds for growth this year include:
o Historic stimulus, record-high savings rates, and below-trend spending, which should provide a substantial lift to consumer spending as the economy reopens this summer.
o The housing sector, which is benefitting from stable demand drivers like remote work and increased Millennial homeownership.

• Economic headwinds include:
o Uneven global recovery if major trading partners like Europe struggle with vaccination efforts, which will result in weak demand for U.S. exports and drag on markets such as oil & gas and industrial equipment.
o A weak U.S. labor market despite regaining almost half of jobs lost during the pandemic.

• Additional factors to watch include:
o Vaccine rollout and new strains of COVID.
o Inflationary pressures
o Infrastructure spending bill

• Equipment investment will likely accelerate in 2021 with improving vaccination rates and the need to invest for the new post-COVID normal. Equipment and software investment is projected to expand by a robust 11.2% in 2021.

• New business volume growth reported in ELFA’s Monthly Leasing and Finance Index rebounded at a strong 9% yearly pace in February, the first YOY improvement since the beginning of the pandemic.

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

Q2 Update to 2021 Economic Outlook Forecasts 11.2% Expansion in Equipment and Software Investment Growth and 5.7% GDP Growth as Pandemic Wanes

Washington, DC, April 14, 2021 – With U.S. vaccination rates rising quickly and the end of the pandemic in sight, equipment and software investment growth is expected to be robust this year as businesses invest to adapt to a post-pandemic normal. Annual equipment and software investment growth of 11.2 percent is forecast for 2021. Annual U.S. GDP growth for 2021 is forecast at 5.7 percent, according to the Q2 update to the 2021 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation.

Scott Thacker, Foundation Chair and Chief Executive Officer of Ivory Consulting Corporation, said, “Finally, we are beginning to see the light at the end of the tunnel. The widespread availability of vaccinations offers hope that economic activity will soon return to pre-pandemic levels, or beyond. The robust stimulus efforts, along with trillions of dollars in pent-up demand, point to a wave of spending this summer and fall. All indicators point to 2021 being a banner year for equipment and software investment, and the equipment finance industry is poised to benefit from that expected economic activity.”

Highlights from the Q2 update to the 2021 Outlook include:

  • The equipment and software investment growth forecast of 11.2 percent benefited from a 21 percent surge in Q4 2020, which provided a strong jumping-off point for 2021.
  • The U.S. economy expanded at 4.3 percent (revised) annualized rate in Q4 2020 as the nation struggled with surging COVID-19 cases and deaths. Although the labor market recovery is still far from complete and the K-shaped recovery has left millions of consumers in a precarious position, the overall balance of risks is on the upside.
  • The U.S. manufacturing sector continued to improve in early 2021 due to strong demand for both consumer and business goods. Underlying demand remains strong, although supply chain backlogs should be monitored and rising input prices could become an increasingly significant concern in the months ahead.
  • Main Street managed to weather the winter months and the third wave of the pandemic, although not without significant difficulty. Further federal relief and stimulus efforts have played an outsized role in the survival and longer-term viability of many businesses. Warmer weather, rising vaccination rates, and the relaxation of pandemic-era operating restrictions offer hope that there are better days ahead.
  • The Federal Reserve again confirmed its commitment to keeping interest rates at zero until at least 2023. The Fed also ended a pandemic-era capital requirement relief measure that could cause turmoil in bond markets.
  • Headwinds to keep an eye on include the potential for higher inflation, the ongoing labor market recovery, and the emergence of new virus strains that could reduce the effectiveness of existing vaccines.

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. Nine verticals are showing signs of accelerating investment after the pandemic-fueled collapse, and three other verticals are showing signs of peaking, although investment growth should remain healthy in the near term. Over the next three to six months, year over year:

  • Agriculture machinery investment growth should remain robust.
  • Construction machinery investment growth could return to positive territory, though recent movement suggests that upside potential is limited.
  • Materials handling equipment investment growth should remain in positive territory.
  • All other industrial equipment investment growth should return to positive territory.
  • Medical equipment investment growth should be strong.
  • Mining and oilfield machinery investment growth appears to have bottomed out and should improve despite this month’s decline.
  • Aircraft investment growth should continue to improve.
  • Ships and boats investment growth should be modest.
  • Railroad equipment investment growth should return to positive territory.
  • Trucks investment growth should return to positive territory.
  • Computers investment growth should remain strong.
  • Software investment growth should accelerate.

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 Q2 report is the first update to the 2021 Economic Outlook and will be followed by two more quarterly updates before 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/.

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 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: Kelli Nienaber, 202-238-3429, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Reaches Highest Level in Three Years

Washington, DC, March 18, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the March 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 67.7, an increase from the February index of 64.4, and the highest level since April 2018.

When asked about the outlook for the future, MCI-EFI survey respondent David Drury, Senior Vice President and Head of Equipment Finance, Fifth Third Bank, said, “We are relatively positive on domestic and global economic activity for this year, and likely next. Despite lingering disruptions, with the tailwinds of government stimulus, central bank liquidity, excess capacity, and pent-up demand, global economic growth may positively surprise in 2021. The big question that could change our mind would be a return of inflation, which would change the dovish nature of most global central banks. Higher inflation would lead to higher interest rates and less of an incentive for businesses to borrow and invest.”

March 2021 Survey Results:

The overall MCI-EFI is 67.7, an increase from the February index of 64.4.

  • When asked to assess their business conditions over the next four months, 50% of executives responding said they believe business conditions will improve over the next four months, up from 46.2% in February. 46.4% believe business conditions will remain the same over the next four months, unchanged from the previous month. 3.6% believe business conditions will worsen, a decrease from 7.7% in February.
  • 42.9% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, 53.6% believe demand will “remain the same” during the same four-month time period, and 3.6% believe demand will decline, all relatively unchanged from February.
  • 28.6% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 23.1% in February. 71.4% of executives indicate they expect the “same” access to capital to fund business, a decrease from 76.9% last month. None expect “less” access to capital, unchanged from the previous month.
  • When asked, 42.9% of the executives report they expect to hire more employees over the next four months, up from 38.5% in February. 57.1% expect no change in headcount over the next four months, a decrease from 61.5% last month. None expect to hire fewer employees, unchanged from February.
  • 3.6% of the leadership evaluate the current U.S. economy as “excellent,” an increase from none the previous month. 78.6% of the leadership evaluate the current U.S. economy as “fair,” up from 76.9% in February. 17.9% evaluate it as “poor,” down from 23.1% last month.
  • 60.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 50% in February. 32.1% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 38.5% last month. 7.1% believe economic conditions in the U.S. will worsen over the next six months, down from 11.5% the previous month.
  • In March 39.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 30.8% last month. 60.7% believe there will be “no change” in business development spending, a decrease from 69.2% in February. None believe there will be a decrease in spending, unchanged from last month.

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

Bank, Middle Ticket
“The prospect of a broadly-vaccinated population should further push open state and local economies.” Adam Warner, President, Key Equipment Finance

Independent, Middle Ticket
“The vaccine rollout is now progressing quickly, and while some predict we won’t see the end of this pandemic until year end, I believe everyone that wants a vaccine will be able to receive one by early May. This bodes well for the return of strong economic activity that will almost certainly boost capital spending significantly.” Bruce J. Winter, President, FSG Capital, Inc.

Independent, Large Ticket
“As COVID restrictions lift and companies have a clearer vision of future demand, it will help companies make more informed capex decisions.” Vincent Belcastro, Group Head Syndications, Element Fleet Management

The COVID-19 Impact Survey of the Equipment Finance Industry will be reported on a quarterly basis in 2021. Additionally, questions will be revised to reflect longer term effects of the pandemic’s impact on equipment finance companies going forward. If you wish to participate on behalf of your company in 2021, please contact Stephanie Fisher at sfisher@leasefoundation.org to determine eligibility for inclusion in the survey.

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
LinkedIn: https://www.linkedin.com/company/10989281/
Instagram: https://www.instagram.com/leasefoundation/
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: Kelli Nienaber, knienaber@leasefoundation.org

Foundation Recommends Studies and Articles for Current Business Environment

The Equipment Leasing & Finance Foundation’s future focus identifies trends, challenges, and opportunities in the equipment finance industry. Foundation studies are produced with a long-lens view into the future, so many of the insights are as relevant now as when they were first released. Here are our recommendations of Foundation reports and articles that are worth taking another look at in today’s equipment finance environment.

  • Going Digital: Current Activities and Future Expectations –This study provides key insights, including digital tools being used currently, digital initiatives to expect in the next few years, constraints to adopting digital solutions, and strategies for creating a digital culture.
  • Headwinds, Undercurrents, and Tailwinds: How Equipment Finance Companies Can Learn and Benefit from the Fintech Phenomenon – In this study the Foundation reveals that rapidly emerging Fintech technology platforms present a disruptive force to the equipment finance industry, but Fintech is not forecast to become a competitor as a major source of equipment funding.
  • The Impact of New Energy Production –   Disruption in the energy sector presents significant opportunities for investors, financiers, equipment vendors and solution providers. This in-depth study, commissioned by the Foundation and prepared by Navigant Research, forecasts across-the-board growth in energy sectors related to a shift in emphasis from centralized fossil power generation to renewable energy.
  • 2018 Industry Future Council Report on the changing workforce and the 2019 IFC report on turning innovation into strategic planning. These reports will assist equipment leasing and finance firms as they implement changes to adapt for future growth.
  • Robots, Cobots, and Finance – Increased robotics utilization among manufacturers and end-users will generate greater financing opportunities as robotics continue to change how business is conducted in the future. The study features a wide-ranging examination of the challenges and growth potential of robots and cobots, and the financing risks for credit, residuals, legal, regulations, and accounting.
  • The State of Credit Quality: Where We Have Been and Where We Are Going Published in 2017, this study investigates key early signs of cyclical macro-economic weakness and if changes made to underwriting standards and portfolio management after the last recession will have a quantitative impact on portfolio performance during the next downturn.
  • On the Rise: How Inflationary Pressures and Rising Interest Rates Could Impact the Equipment Finance Industry – This report explains how a world of rising inflation and interest rates may affect the equipment finance industry, including customer demand, portfolio performance, spreads, and the propensity to finance.
  • Digital Documents – This study quantifies and refines the extent to which the equipment leasing industry is now engaged in Electronic Lease Transactions, and the challenges that have been addressed in the process.  The study also seeks to understand those obstacles, both actual and perceived, that are slowing the path to expanded use of Electronic Lease Transactions.  Finally, it offers concrete advice on how the industry may address those challenges and accelerate adoption of Electronic Lease Transactions.

Vertical Market Outlook Series:

Journal of Equipment Lease Financing articles

  • The Business Guide to Improving Information Security– The continuing increase in large-scale cybersecurity breaches has businesses searching for solutions to reduce their risk. Despite an explosion of new information security products and services, no single tool can reduce risk. Equipment financing companies must build a formal information security framework, complete with policies and procedures.
  • Special Consideration for Perfection Opinions Covering Electronic Chattel Paper as Collateral- The equipment leasing industry is expanding its use of electronic records and signatures to document equipment leases.  As the use of electronic lease documentation grows, so does the desire of equipment lessors to offer those leases to lenders as collateral on the same footing with paper-based leases.

All Foundation studies and articles are available for free download at our online Research Library.

Equipment Finance Industry Confidence Higher in February

Washington, DC, February 18, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the February 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 64.4, an increase from the January index of 59.6.

When asked about the outlook for the future, MCI-EFI survey respondent Brad Peterson, CEO, Channel Partners Capital, said, “Although we believe the 2021 PPP program will suppress capital needs for a short period of time among SMBs, we’re expecting a positive rebound from a year’s worth of pent-up pandemic demand. Our post-pandemic portfolio looks fantastic and we expect the strong performance to continue through 2022. We believe this is the time to invest in SMB marketplace opportunities.”

February 2021 Survey Results:
The overall MCI-EFI is 64.4, an increase from the January index of 59.6.

  • When asked to assess their business conditions over the next four months, 46.2% of executives responding said they believe business conditions will improve over the next four months, up from 33.3% in January. 46.2% believe business conditions will remain the same over the next four months, a decrease from 59.3% the previous month. 7.7% believe business conditions will worsen, a slight increase from 7.4% in January.
  • 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 33.3% in January. 53.9% believe demand will “remain the same” during the same four-month time period, a decrease from 59.3% the previous month. 3.9% believe demand will decline, down from 7.4% in January.
  • 23.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 18.5% in January. 76.9% of executives indicate they expect the “same” access to capital to fund business, a decrease from 81.5% last month. None expect “less” access to capital, unchanged from the previous month.
  • When asked, 38.5% of the executives report they expect to hire more employees over the next four months, up from 25.9% in January. 61.5% expect no change in headcount over the next four months, a decrease from 66.7% last month. None expect to hire fewer employees, down from 7.4% in January.
  • None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” down from 77.8% in January. 23.1% evaluate it as “poor,” up from 22.2% last month.
  • 50% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 51.9% in January. 38.5% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 37% last month. 11.5% believe economic conditions in the U.S. will worsen over the next six months, up slightly from 11.1% the previous month.
  • In February 30.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 22.2% last month. 69.2% believe there will be “no change” in business development spending, a decrease from 74.1% in January. None believe there will be a decrease in spending, down from 3.7% last month.

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

Bank, Small Ticket
“Wintrust Specialty Finance had a solid year of growth in spite of the global pandemic. 2021 has started out well with strong application flow, approval rates and funding volume. Additionally, the portfolio has performed with low delinquency and credit quality. I expect that mid-year will bring challenges as PPP funds fade. However, we are focused in industries that are performing with essential use collateral that we believe will continue to perform.” David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Bank, Middle Ticket
“We are seeing pent-up demand for equipment and structure investment. Due to the continued uncertainty caused by COVID and the low interest rate environment, customers are preferring to finance rather than pay cash.” Michael Romanowski, President, Farm Credit Leasing

Independent, Large Ticket
“The equipment finance and leasing marketplace has always been resilient and performs well in market dislocation. I have concerns around the unknown impact of numerous executive orders, as well as COVID-19.” Dave Fate, President and CEO, Stonebriar Commercial Finance

The COVID-19 Impact Survey of the Equipment Finance Industry, conducted monthly since its launch in May 2020 and released with the MCI-EFI, will be reported on a quarterly basis in 2021. Additionally, questions will be revised to reflect longer term effects of the pandemic’s impact on equipment finance companies going forward. If you wish to participate on behalf of your company in 2021, please contact Stephanie Fisher at sfisher@leasefoundation.org to determine eligibility for inclusion in the survey.

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
LinkedIn: https://www.linkedin.com/company/10989281/
Instagram: https://www.instagram.com/leasefoundation/
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: Kelli Nienaber, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Remains Steady in January at Pre-Pandemic Levels

Washington, DC, January 21, 2020 – The Equipment Leasing & Finance Foundation (the Foundation) releases the January 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 59.6, unchanged from the December index and in line with pre-pandemic levels.

When asked about the outlook for the future, MCI-EFI survey respondent Michael Romanowski, President, Farm Credit Leasing, said, “As we enter a new year and a new administration, eyes will be on fiscal policy to get us through the final stretches of the pandemic. We expect business investment to increase once the path forward is clearer.”

January 2021 Survey Results:
The overall MCI-EFI is 59.6, unchanged from the December index.

• When asked to assess their business conditions over the next four months, 33.3% of executives responding said they believe business conditions will improve over the next four months, up from 27.6% in December. 59.3% believe business conditions will remain the same over the next four months, a decrease from 62.1% the previous month. 7.4% believe business conditions will worsen, a decrease from 10.3% in December.

• 33.3% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 27.6% in December. 59.3% believe demand will “remain the same” during the same four-month time period, an increase from 55.2% the previous month. 7.4% believe demand will decline, down from 17.2% in December.

• 18.5% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 24.1% in December. 81.5% of executives indicate they expect the “same” access to capital to fund business, an increase from 75.9% last month. None expect “less” access to capital, unchanged from the previous month.

• When asked, 25.9% of the executives report they expect to hire more employees over the next four months, down from 31% in December. 66.7% expect no change in headcount over the next four months, a decrease from 69% last month. 7.4% expect to hire fewer employees, up from none in December.

• None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 77.8% of the leadership evaluate the current U.S. economy as “fair,” up from 72.4% in December. 22.2% evaluate it as “poor,” down from 27.6% last month.

• 51.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 55.2% in December. 37% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 34.5% last month. 11.1% believe economic conditions in the U.S. will worsen over the next six months, up from 10.3% the previous month.

• In January 22.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 34.5% last month. 74.1% believe there will be “no change” in business development spending, an increase from 62.1% in December. 3.7% believe there will be a decrease in spending, up slightly from 3.5% last month.

The COVID-19 Impact Survey of the Equipment Finance Industry, conducted monthly since its launch in May 2020 and released with the MCI-EFI, will be reported on a quarterly basis in 2021. Additionally, questions will be revised to reflect longer term effects of the pandemic’s impact on equipment finance companies going forward. If you wish to participate on behalf of your company in 2021, please contact Stephanie Fisher at sfisher@leasefoundation.org to determine eligibility for inclusion in the survey.

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/
Instagram: https://www.instagram.com/leasefoundation/
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: Kelli Nienaber, knienaber@leasefoundation.org

Q1 2021 Equipment Leasing & Finance Industry Snapshot Now Available

The Equipment Leasing & Finance Foundation has released the Q1 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:
• The U.S. economy surged at an unprecedented 33.1% annualized rate in Q3 as the nation partially reopened following the pandemic-induced shutdowns of early 2020. However, due to the historic deep decline in Q2, the U.S. economy is expected to end the year down 3.5% from 2019.
• Growth in Q3 was fueled by a resumption in consumer spending and business investment:
o Consumer spending surged by 40.6% (annualized) in Q3, contributing 25.2 percentage points to GDP growth.
o Business investment grew 21.8% (annualized), while equipment and software investment jumped 46.9% (annualized) in Q3, contributing 3.4 percentage points to GDP growth.
• Among the range of COVID-19’s impacts on businesses are still struggling retail and travel industries. The service industry appears to be expanding after bottoming out in late spring. Leisure and hospitality continues to struggle, and even with a vaccine, prospects for the airline and hotel industries in 2021 are uncertain.
• Despite the ongoing recovery, millions of households are struggling to meet basic needs and many small businesses are in survival mode, which will ultimately weigh on growth prospects in 2021. However, the second half of the year looks more promising as the vaccine allows businesses to reopen and/or expand capacity. Overall, the economy is expected to grow 4.7% in 2021.
• Although headline employment numbers look promising, a detailed look shows:
o The unemployment rate fell from 6.9% to 6.7% in November due to unemployed people leaving the labor force.
o If these people who left the labor force were considered unemployed, the rate would be nearly 10%.
o Full labor market recovery would not occur until late 2022 at the current pace.
• New business volume growth reported in ELFA’s Monthly Leasing and Finance Index declined 9% year over year in October as the industry struggles to reclaim it pre-pandemic level. Cumulative new business volume for the year is down 5.8% from a year ago.

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

Contact: Anneliese DeDiemar, adediemar@leasefoundation.org

Equipment Leasing & Finance Foundation Elects Officers and Welcomes New Trustees Following Annual Meetings

Washington, DC, December 22, 2020 – The Equipment Leasing & Finance Foundation (Foundation) announced the 2021 officers of its Board of Trustees (Board). Board Officers serving are Scott Thacker, Chief Executive Officer, Ivory Consulting Corporation, as Chair; Nancy Pistorio, President, Madison Capital LLC, as Vice Chair; Zack Marsh, CFO, Orion First Financial, LLC, as Secretary/Treasurer; and Ralph Petta, President and CEO, Equipment Leasing and Finance Association (ELFA) as President. Jeffry Elliott, Senior Managing Director, Huntington Equipment Finance, is Immediate Past Chair. The officer elections were held following the Board‘s annual meeting.

New members appointed to the Foundation Board of Trustees include Shari Lipski, Principal, ECS Financial Services, Inc.; William Tefft, SVP Asset Management, Pacific Western Bank; and Bonnie Wright.

“The Foundation’s 2021 Board represents a wealth of expertise, talent, and experience in the equipment finance industry,” said Scott Thacker. “We are privileged that each one of them shares a strong passion for the three key components of our mission – research, education, and sustainability, and we are fortunate to benefit from their volunteer time and commitment as we collectively work to advance the Foundation for the benefit of the equipment finance industry.”

Trustees continuing on the Board for 2021 are:
•   Jeffrey Berg, Executive Vice President, DLL
•   Katie Emmel, Chief Operating Officer, International Decision Systems
•   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.
•   James Johnson, Ph.D, Retired, Professor of Finance, Northern Illinois University
•   Brian Madison, President, TrinityRail Leasing and Management Services
•   Bonnie Michael, Vice President, Legal and General Counsel – United States, Volvo Financial Services
•   Michael Romanowski, President, Farm Credit Leasing
•   Thomas Ware, President, Tom Ware Advisory Services, LLC
•   Donna Yanuzzi, Director, Vendor & Small Business Equipment Finance, F.N.B. Equipment Finance

Kelli Nienaber will continue to serve as Executive Director.

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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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Contact: Anneliese DeDiemar, adediemar@leasefoundation.org

Equipment Finance Industry Confidence Reaches Pre-Pandemic Levels, COVID-19 Impact Survey Data Reveal Improved Default Expectations, Deferrals

Washington, DC, December 17, 2020 – The Equipment Leasing & Finance Foundation (the Foundation) releases the December 2020 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 59.7, an increase from the November index of 56.1.

The Foundation also releases highlights of the COVID-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry. 47 survey responses were collected from December 1-14 on a range of topics, including payments deferrals, defaults, and staff analysis. 50% of companies expect that the default rate will be greater in 2020 than in 2019, down from 54% in November; 33% expect it to be the same, down from 35% last month; and 17% expect it to be lower compared to 11% last month. Only 2% of lenders reported having more than 10% of their portfolio now under deferral, down from 4% of lenders last month. The largest percentage of respondents (64%) have 0.01-4.99% of dollars outstanding currently under payment deferral in their owned portfolio. Comments from survey respondents follow MCI-EFI survey comments below, and additional survey results and analysis are available at https://www.leasefoundation.org/industry-resources/covid-impact-survey/.

When asked about the outlook for the future, MCI-EFI survey respondent Paul Tyczkowski, Senior Vice President Finance, LEAF Commercial Capital Inc., said, “While the COVID crisis continues to have significant impacts on businesses as we close out the year, there’s reason for cautious optimism now that the distribution of a highly effective vaccine is underway. Assuming distribution occurs as planned, I’m hopeful for a steady return to at least some level of normalcy in our lives and the economy during 2021.”

December 2020 Survey Results:
The overall MCI-EFI is 59.7, an increase from the November index of 56.1.

  • When asked to assess their business conditions over the next four months, 27.6% of executives responding said they believe business conditions will improve over the next four months, up from 26.9% in November. 62.1% believe business conditions will remain the same over the next four months, an increase from 53.9% the previous month. 10.3% believe business conditions will worsen, a decrease from 19.2% in November.
  • 27.6% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 19.2% in November. 55.2% believe demand will “remain the same” during the same four-month time period, a decrease from 69.2% the previous month. 17.2% believe demand will decline, up from 11.5% in November.
  • 24.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 23.1% in November. 75.9% of executives indicate they expect the “same” access to capital to fund business, a decrease from 76.9% last month. None expect “less” access to capital, unchanged from the previous month.
  • When asked, 31% of the executives report they expect to hire more employees over the next four months, up from 30.8% in November. 69% expect no change in headcount over the next four months, an increase from 57.7% last month. None expect to hire fewer employees, down from 11.5% in November.
  • None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 72.4 of the leadership evaluate the current U.S. economy as “fair,” down from 76.9% in November. 27.6% evaluate it as “poor,” up from 23.1% last month.
  • 55.2% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 34.6% in November. 34.5% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 50% last month. 10.3% believe economic conditions in the U.S. will worsen over the next six months, down from 15.4% the previous month.
  • In December 34.5 % of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 26.9% last month. 62.1% believe there will be “no change” in business development spending, a decrease from 69.2% in October. 3.5% believe there will be a decrease in spending, relatively unchanged from 3.9% last month.

December 2020 MCI-EFI Survey Comments from Industry Executive Leadership:

Independent, Middle Ticket
“The end to the pandemic is in sight, so while we need to navigate the next few months carefully, FY 2021 will undoubtedly improve as the year progresses.” Bruce J. Winter, President, FSG Capital, Inc

Bank, Middle Ticket
“Post-election it’s still uncertain how the political environment will impact longer-term plans for business investment. Hopefully the fiscal stimulus required to steady the current instability will be passed without much further delay.”  Michael Romanowski, President, Farm Credit Leasing

Executive Comments from COVID-19 Impact Survey of the Equipment Finance Industry

Independent, Middle Ticket
“Through 2021, the economic climate will be tepid in many sectors and robust in a few. The medium term will show a significant uptick in volume, particularly in the construction and ancillary industries. With the political strife, social justice issues, U.S. debt load, and global competition, the long term is uncertain at best.” Jonathan Ruga, CEO, Sentry Financial Corporation

Bank, Middle Ticket
“There’s quite a bit of pent-up demand due to COVID. Mid-2021 we should see a large increase in equipment purchases in all verticals. As long as there is equipment to purchase there will always be equipment finance needs.” Donna Yanuzzi, Managing Director of Sales and Marketing, F.N.B. Equipment Finance

Independent, Large Ticket
“Given the rising COVID rates, I would expect a temporary slowdown in activity in the short term. Medium term, and depending on monetary and tax policy with the new Biden administration, could exhibit a downturn and short recession. I believe in the long term our industry will be strong with new technological and alternative asset types driving demand.” Vincent Belcastro, Group Head Syndications, Element Fleet Management

To participate in the COVID-19 Impact Survey of the Equipment Finance Industry: The Foundation invites all regular ELFA member companies to participate. Survey responses are limited to one per company. If you did not receive a survey and would like to participate, please contact Stephanie Fisher, sfisher@leasefoundation.org, by December 31 to determine eligibility for inclusion in the 2021 Q1 survey.

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: Anneliese DeDiemar, ADeDiemar@leasefoundation.org

2021 Economic Outlook Forecasts 7.8% Expansion in Equipment and Software Investment Growth and 4.7% GDP Growth Despite Uneven Recovery

Washington, DC, December 16, 2020 – Equipment and software investment growth fared better than overall GDP growth in 2020 as businesses invested to adapt to the COVID-19 pandemic, and growth should remain well into positive territory in the beginning of 2021. Annual equipment and software investment growth of 7.8 percent is forecast for 2021. Annual U.S. GDP growth for 2021 is forecast at 4.7 percent, according to the 2021 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation.

Scott Thacker, Foundation Chair and Chief Executive Officer of Ivory Consulting Corporation, said, “This update, while reflecting widely disparate performance in various segments of the economy, indicates the worst of the economic downturn appears to be in the rearview mirror — although that does not mean the road ahead is clear. Equipment and software investment surged to an annualized rate of 47 percent in Q3 after an unprecedented 28 percent decline in Q2.  In Q3, investment levels in 11 of the 12 equipment verticals that the Foundation monitors improved and nine experienced double or triple-digit growth. Prospects of widely-distributed vaccines in 2021 should provide a boost to the economy, particularly in transportation-focused industries.”

Highlights from the 2021 Outlook include:

  • While equipment and software investment is forecast to grow 7.8 percent (annualized) in 2021, some industries will likely continue to struggle under the weight of the pandemic until a vaccine is widely available.
  • The U.S. economy expanded at an unprecedented 33.1 percent (revised) annualized rate in Q3 as the nation partially reopened. However, GDP is still well below its level at the end of 2019, underscoring the long road ahead to a full recovery.
  • The U.S. manufacturing sector recovery continued in late 2020. Shipments and new orders of core capital goods rose to record levels as firms in several industries responded to elevated demand. Though output is relatively close to pre-pandemic levels, manufacturing employment remains significantly depressed.
  • On Main Street, the fragile equilibrium of the late summer and early fall faces another serious threat this winter. Record COVID cases and deaths have forced several major cities to impose new lockdowns, and the effects are beginning to show. Small business revenues are falling while Main Street awaits the vaccine and another targeted federal relief effort.
  • The Federal Reserve remains committed to keeping interest rates at or near zero for several years. The Fed also intends to continue its liquidity-boosting measures, though its officials have stated that monetary policy alone is likely insufficient to prop up the U.S. economy.

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. Momentum readings are below the five-year average in six of 12 verticals, and all 12 verticals are accelerating. Over the next three to six months, year over year:

  • Agriculture machinery investment growth will accelerate.
  • Construction machinery investment growth should rebound.
  • Materials handling equipment investment should return to positive growth.
  • All other industrial equipment investment growth should experience a strong resurgence.
  • Medical equipment investment growth should continue to strengthen.
  • Mining and oilfield machinery investment growth should improve from current levels but may remain in negative territory.
  • Aircraft investment growth appears to have bottomed out earlier in the year and should improve, but is likely to remain in negative territory.
  • Ships and boats investment growth should turn positive.
  • Railroad equipment investment growth should strengthen.
  • Trucks investment growth appears likely to rebound after bottoming out in Q2
  • Computers investment growth should remain robust and may strengthen further.
  • Software investment growth should improve.

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 2021.

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: Anneliese DeDiemar, ADeDiemar@leasefoundation.org