U.S. Economic Outlook

2021 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: E&S investment growth fared better than overall GDP growth in 2020 as businesses invested to adapt to the pandemic. The worst of the economic downturn appears to be in the rearview mirror, and E&S investment growth should remain well into positive territory in the beginning of 2021. However, the recovery has been uneven, and while most industries will fare better in 2021 than they did in 2020, some will continue to struggle under the weight of the pandemic until a vaccine is widely available in mid-2021.

Momentum Monitor: While investment momentum readings are below the long-term average in 6 of 12 verticals tracked by the Foundation’s Momentum Monitors, all 12 are showing signs of strong acceleration, suggesting that investment activity should be elevated in early 2021.

Manufacturing Sector: The manufacturing sector recovery continued in late 2020. Shipments and new orders of core capital goods rose to record levels as firms in several industries responded to elevated demand. Though output is relatively close to pre-pandemic levels, manufacturing employment remains significantly depressed.

Small Businesses: On Main Street, the fragile equilibrium of the late summer and early fall faces another serious threat this winter. Record COVID cases and deaths have forced several major cities to impose new lockdowns, and the effects are beginning to show. Small business revenues are falling while Main Street awaits the vaccine and another targeted federal relief effort.

Fed Policy: The Federal Reserve remains committed to keeping interest rates at or near zero for several years. The Fed also intends to continue its liquidity-boosting measures, though Fed officials have stated that monetary policy alone is likely insufficient to prop up the US economy.

U.S. Economy: The pandemic’s economic effects have been uneven: lower-income households and certain industries have borne the brunt of the pain. Despite the ongoing recovery, millions of households are struggling to meet basic needs and many small businesses are in survival mode. While financial stress will likely rise in 2021, a targeted stimulus bill in the coming weeks could provide a bridge for consumers and businesses until a vaccine is widely available this spring or  summer — paving the way for an economic surge in the second half of the year.