The Equipment Leasing & Finance Foundation has released the Q1 2022 Equipment Leasing & Finance Industry Snapshot, an indispensable information resource for industry participants. Designed for use in executive briefings and presentations, the presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry with clear, easy-to-digest charts and short narratives of key trends.
Among the range of details in the new release:
◊ GDP growth: Overall, the Foundation projects the U.S. economy will grow by 3.5 percent in 2022.
- U.S. GDP growth slowed markedly in Q3 2021, expanding 2.1 percent (annualized) as the Delta variant and snarled supply chains slowed growth. Growth in Q3 was driven by increases in consumer spending and a buildup in private inventories.
◊ Economic tailwinds for growth in 2022 include:
- Improved public health situation given the widespread availability of vaccines and relatively high vaccination rates.
- Infrastructure bill, the largest public infrastructure spending initiative since the 2009 Recovery Act. It will be a tailwind for equipment verticals including trucks, railroad, communications and materials handling equipment (along with software).
◊ Economic headwinds include:
- Labor market tensions as workers use their leverage amidst robust demand for labor.
- Persistent supply chains disruptions with many industries facing high shipping costs and delivery delays, and the potential for additional bottlenecks if U.S. trading partners shutdown borders in response to new virus strains.
- Worsening inflation pressures that previously were mostly contained to industries impacted by the pandemic, and are now more broad-based.
◊ Additional factors to watch include:
- Housing market activity which is showing some signs of slowing.
- Over-valued equity markets given substantial increases in the last 18 months and the sell-off that followed news of the new Omicron variant.
- Accelerated financial tightening as the Fed signals rate hikes and ending its asset purchase program sooner than expected.
◊ Equipment investment is expected to grow at a 4.6 percent pace (annualized), a slower pace compared to 2021.
◊ New business volume growth reported in in ELFA’s Monthly Leasing and Finance Index expanded 16 percent year over year in October. Solid business investment growth is expected to drive new business volume growth throughout 2022, although Y/Y growth may ease compared to double-digit expansion in 2021.
Prepared by Keybridge Research and updated quarterly, the snapshot is available for free download here.