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U.S. Economic Outlook

2025 Equipment Leasing & Finance U.S. Economic Outlook - Q3 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 - Q3 Update include:

Highlights from the 2025 Equipment Leasing & Finance U.S. Economic Outlook – Q3 Update include:

U.S. economy: Overall, the U.S. economy is on uneven footing. While business-friendly tax and regulatory policy are tailwinds, consumer spending has slowed and job growth has been driven almost exclusively by healthcare, leisure and hospitality, and state and local government. Meanwhile, the Fed has been hesitant to cut rates due to worries of tariff-induced inflation later this year. With uncertainty elevated and aggregate demand softening, only modest economic growth is expected in 2025.

Business sentiment: Executives at large firms expect slower growth in hiring, capex, and sales, but small business owners are less pessimistic. Both the NFIB Small Business Optimism Index and the Foundation’s Monthly Confidence Index have rebounded from spring lows and returned to their historical averages. Additionally, ELFA’s CapEx Finance Index improved in May after a slow start to the year, and new business volume is now back on its two-year growth trendline.

Equipment and software investment: Equipment and software investment started off the year with a bang, growing by nearly 22% (annualized). However, the robust expansion, which was heavily concentrated in the technology and medical sectors, was fueled by efforts to front-load purchases to avoid new tariffs. Investment growth likely slowed markedly in Q2, but if the Fed cuts rates in Q3 and Q4 as anticipated, it could provide a modest boost to investment later this year.

Equipment finance industry: The equipment finance industry should benefit from the recent passage of the One Big Beautiful Bill Act in multiple ways, including a permanent return to 100% expensing and EBITDA-based interest deduction, as well as a permanent 20% deduction for qualified business income for pass-through businesses. However, the accelerated phaseout for clean energy tax incentives will likely reduce investment in some verticals.