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.

The Equipment Leasing and Finance Association's Wednesday Webinar (Coronavirus and the U.S. Economy: Implications for the Equipment Finance Industry) featuring content from the Foundation's Q2 update is now available.

Report Summary - Equipment & Software Investment Outlook

Owing to the substantial uncertainty stemming from both COVID-19 and the impact of social distancing measures on the U.S. economy, investment in equipment and software is projected to contract severely in 2020, to between -8.6 and -13.5 percent. Similarly, the U.S. economy is expected to have its worst year in decades, with annual growth slowing to between -5.0 and -9.4 percent.  While the economy will continue to suffer until the public health crisis is resolved, conditions are expected to improve in the third and fourth quarters, which should produce strong annualized growth rates after a large contraction during the first half of the year. Nonetheless, the economy will be smaller at the end of 2020 than it was at the start.

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 slowing to the weakest growth since 2016 last year, E&S investment is expected to plunge along with the rest of the U.S. economy. There are a few industries, however (e.g., medical devices, computers), that should be more resilient.

Momentum Monitor: Momentum readings are below the long term-historical average in 10 of 12 verticals, while 7 of 12 verticals are decelerating. Notably, most of the economic indicators on which the Momentum Monitors are based do not yet reflect the effects of the pandemic.

Capital Investment: Business investment contracted for three consecutive quarters in 2019 and will suffer due to the pandemic. The oil sector is likely to be particularly exposed due to the combination of cratering global demand and a price war.

Manufacturing Sector: Though certain industries critical to public health may see a boost to demand, the broader manufacturing sector faces a sharp downturn in 2020.

Small Businesses: While some Main Street businesses will continue to operate as the country copes with the pandemic, many won’t — and most will suffer. The success of federal efforts to help small businesses stay afloat and avoid widespread layoffs and business failures is critical.

U.S. Economy: The U.S. economy is in recession and will suffer a historically deep contraction in the second quarter. However, a timely and well-coordinated policy response of sufficient scale could limit the recession’s long-term effects. While the economy will continue to suffer until the public health crisis is resolved, we anticipate a return to growth in the second half of the year.