U.S. Economic Outlook

2020 Equipment Leasing & Finance U.S. Economic Outlook

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.

Report Summary - Equipment & Software Investment Outlook

This outlook acknowledges the substantial uncertainty stemming from both the epidemiology of COVID-19 and the U.S. economy’s response to social distancing measures. As such, projections for certain economic indicators are provided as ranges.

Equipment and Software Investment: After collapsing in the first quarter (and likely the second as well), E&S investment is expected to improve relative to the first half of the year as businesses reopen. Though investment growth is likely to remain weak by historical standards in most sectors, some verticals, including Computers, could see stronger demand.

Momentum Monitor: Momentum readings are below the five-year average in 11 of 12 verticals (Computers is the lone exception), while all 12 are decelerating.

Manufacturing Sector: U.S. manufacturers suffered in March and April based on various measures of activity, but there were signs of improvement in May as new orders, shipments, and the ISM manufacturing index all rose. Whether this improvement can be sustained remains to be seen and will hinge on the trajectory of the virus, both domestically and globally.

Small Businesses: Stimulus efforts have helped forestall a wave of Main Street bankruptcies, but new virus flare-ups are disrupting some reopening efforts, further stressing small businesses.

Fed Policy: The Federal Reserve has implemented historic measures to boost liquidity in financial markets. The federal funds rate remains at its zero-lower bound, the Fed’s balance sheet has expanded by $3 trillion, and the Fed has implemented a new program to backstop loans to nonfinancial firms. These actions will ensure ultra-low interest rates for the foreseeable future.

U.S. Economy: The U.S. economy entered a deep recession in March, and while the worst of the downturn appears to be behind us in large part due to an unprecedented level of federal assistance, a full economic recovery is unlikely until 2021 at the earliest. Recent job growth is encouraging, but the scale of job losses in March and April will take years from which to recover.