U.S. Economic Outlook

2021 Equipment Leasing & Finance U.S. Economic Outlook Q2 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.

Report Summary - Equipment & Software Investment Outlook

Equipment and Software Investment: E&S investment growth sustained its rebound through the end of 2020 despite surging COVID cases and renewed shutdowns. With U.S. vaccination rates rising quickly and the end of the pandemic in sight, E&S investment growth is expected to be robust as businesses invest to adapt to a post-pandemic normal.

Momentum Monitor: Investment momentum readings are now above the long-term average in 11 of 12 verticals tracked by the Foundation’s Momentum Monitors, reflecting the healthy position of many of the verticals and the positive outlook for 2021 for equipment investment.

Manufacturing Sector: The manufacturing sector continued to improve in early 2021 thanks to strong demand for both consumer and business goods. Though storms in February tempered new orders and shipments of capital goods, underlying demand remains strong. Supply chain backlogs should be monitored, however, and rising input prices could become an increasingly significant concern in the months ahead.

Small Businesses: Main Street managed to weather the winter months and the third wave of the pandemic, though 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.

Fed Policy: The Federal Reserve again confirmed its commitment to keeping interest rates at zero for several years. The Fed also ended a pandemic-era capital requirement relief measure that could cause turmoil in bond markets.

U.S. Economy: Finally, the light at the end of the tunnel is nearing. Though the virus will likely be with us for years to come, the accelerating pace of vaccinations offers hope that economic activity can soon return to normal. Moreover, in light of robust stimulus efforts, trillions of dollars in pent-up demand will likely lead to a wave of spending this summer and fall. Though 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 has shifted to the upside.