U.S. Economic Outlook

2021 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.

Report Summary - Equipment & Software Investment Outlook

Equipment and Software Investment: E&S investment jumped again in the first quarter and is well above its pre-pandemic level. Businesses across the country have continued to invest to adapt to a post-pandemic economy, which should support growth for the rest of the year.

Momentum Monitor: Investment momentum readings are now above the long-term average in all 12 verticals tracked by the Foundation’s Momentum Monitors, reflecting sustained demand for new equipment and the healthy outlook for equipment and software investment.

Manufacturing Sector: The manufacturing sector is still facing record levels of demand, even as the pandemic hamstrings key manufacturing centers around the world. However, industrial output in the U.S. has been constrained by acute shortages of key inputs and elevated prices.

Small Businesses: Main Street has emerged from the pandemic having suffered less damage than many expected, in part due to historic federal relief efforts. Consumers are spending again, capacity limits and distancing requirements have largely been lifted, and the outlook is as bright as it has been since the pandemic began. However, many firms are contending with newfound difficulty hiring workers, especially in lower-wage sectors such as retail and leisure & hospitality.

Fed Policy: Federal Reserve officials have, for the most part, reached consensus agreement that inflation pressures will prove to be transitory. However, given the speed and magnitude of the economic rebound, the Fed has hedged a bit and signaled that rate hikes could begin in 2023.

U.S. Economy: America is finally open for business. Though concerns about the pandemic still linger, states have by and large lifted COVID-era restrictions. Consumers are spending, businesses are investing, and people are ramping up travel plans for both work and pleasure. While the outlook is mostly positive, notable headwinds remain, including two — supply chain issues and services exports — that stem from the rest of the world’s continued struggles with COVID-19 and comparatively slower vaccination push. Additionally, the risk of sustained high inflation and the expiration of federal support measures are key factors to watch this summer and fall. All told, however, the economic rebound is quite strong, and the summer months should yield continued strong growth for both the economy and equipment finance industry.