The Equipment Leasing & Finance Foundation has released the Q3 2023 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 Q3 Snapshot:

◊ The Foundation projects that the U.S. economy will grow by 1.6 percent in 2023 given stronger-than-expected growth in Q1.

• Growth in Q1 was broad-based, fueled by consumer and government spending, net exports, and business investment.
• While the economy is still above water, the Foundation continues to expect a recession to begin before year end.

◊ Economic tailwinds for growth in 2023 include:

• A strong labor market, which added over 1.7 million jobs in the first half of 2023 and continues to exceed expectations and fuel consumer spending.
• A manufacturing construction spending boom that indicators suggest is likely to continue boosted by new federal policy.

◊ Economic headwinds include:

• A credit crunch resulting from the high-profile bank failures in the spring that led many small and mid-sized banks to tighten lending standards. Tightening lending standards are likely to have broad-based effects on the U.S. economy.
• A global economic slowdown due to many of the same factors that have plagued the U.S. economy in recent months.

◊ Factors to Watch

• Have we turned the corner on inflation?  Headline inflation softened significantly in the first half of 2023, easing to 3.0 percent year over year in June. However, core inflation is still well above the Fed’s target, and the Foundation expects headline inflation to rise to around 4.0 percent later this year, triggering more tightening from the Fed.
• Housing market rebound. The housing market has dragged on U.S. economic growth since the Fed began raising rates. However, over the last three to six months, there have been some positive signs. Time will tell if the housing market recovery will sustain itself, particularly if inflation proves stickier than hoped and the Fed raises rates later this year.

◊ Equipment and software investment is expected to grow at a 0.9 percent pace in 2023.

• While equipment and software investment appears to have improved in Q2 after weaker-than-expected performance in Q1, it is expected to ease in the second half of 2023 as businesses pull back on investment due to higher interest rates and a slowing economy.
• Most equipment verticals are below their historical average, suggesting that the climate for investment growth is likely to remain weak in the near term.

◊ New business volume growth reported in ELFA’s Monthly Leasing and Finance Index was up 1.1 percent year over year, and 0.9 percent year to date in May, well below the pace needed to keep up with inflation. High interest rates and tightening lending standards are likely contributing to the sluggishness, and growth remains negative in real terms.

Prepared by Keybridge Research and updated quarterly, the snapshot is available for free download at https://www.leasefoundation.org/industry-resources/industry-snapshot/