2025 Equipment Leasing & Finance U.S. Economic Outlook - Quarter 2 Update
This comprehensive report analyzes global and domestic trends impacting capital spending and economic growth in the coming year. It identifies signposts specific to the equipment finance industry and highlights key verticals, featured in the monthly Momentum Monitor, that identify turning points in their respective investment cycles. Each economic outlook is updated quarterly.
Highlights from the 2025 Equipment Leasing & Finance U.S. Economic Outlook - Quarter 2 Update include:
- U.S. Economy: Tariffs and their related uncertainty effects are expected to weigh on the economy, with most economic forecasts predicting weak or negative GDP growth, higher inflation, and lower household disposable income this year.
- Manufacturing: The manufacturing sector has exhibited noticeable improvement in recent months. Several measures of industrial activity have strengthened, including industrial production, capacity utilization, and the ISM Purchasing Managers Index for Manufacturing. Moreover, shipments and new orders of core capital goods have been generally positive in recent months, driven by strong growth in primary metals, computers, and electronics. These readings may reflect tariff-related pull-forward activity, and it is noteworthy that new business volume is roughly flat year-to-date while industry confidence has plummeted as measured by ELFA’s Capex Finance Index and ELFF’s Monthly Confidence Index, respectively.
- Equipment and software investment: First-quarter investment in equipment and software is expected to bounce back after a poor Q4, in part due to a “pull-forward” effect as end-users attempt to front-run tariffs. However, uncertainty around trade policy and heightened concerns about the overall economic climate are expected to drag on investment growth over the next six months.
- Equipment finance industry: Higher equipment prices due to tariffs could lead more end-users to explore financing options. On balance, however, the impact of tariffs to the equipment finance industry is likely to be negative, as this issue has coincided with a sharp increase in economic uncertainty, which often results in firms delaying major investment decisions until the outlook becomes clearer. The new tariff regime is likely to result in slower economic growth and a weaker environment for equipment and software investment for the remainder of the year.