Q2 Economic Outlook Forecasts 2.8% Growth In Equipment & Software Investment in 2017

WASHINGTON (April 12, 2017) — Investment in equipment and software is expected to grow 2.8 percent in 2017, according to the Q2 update to the 2017 Equipment Leasing & Finance U.S. Economic Outlook released by the Equipment Leasing & Finance Foundation. The Foundation lowered its 2017 equipment and software investment forecast to 2.8 percent, down from 3 percent growth forecast in its 2017 Annual Outlook released in December 2016.  The report predicts that equipment and software investment will improve in 2017 after a lackluster 2016, as renewed business confidence and firming energy prices lift the potential for business investment and capex spending while reducing uncertainty. The Foundation’s report, which is focused on the $1 trillion equipment leasing and finance industry, highlights key trends in equipment investment and places them in the context of the broader United States economic climate. The report will be updated quarterly throughout 2017.

Ralph Petta, president of the Foundation and president and CEO of the Equipment Leasing and Finance Association, said, “Our forecast for an improving equipment finance sector is based largely on actions coming out of Washington that indicate a more business-friendly approach by the new Trump Administration, the recent move by the Fed to gradually increase short-term interest rates, and early indications of a steadily growing economy. It is our hope that these factors do in fact provide impetus for the equipment finance industry this year to outperform 2016.”

Highlights from the study include:

• Equipment and software investment is expected to grow by 2.8 percent in 2017, a significant improvement over the -1.1 percent contraction in 2016. After negative growth for most of last year, equipment and software investment increased 1.7 percent in Q4 2016 and appears likely to resume a growth trajectory in 2017, particularly if elevated business confidence leads to increased business investment.
• The U.S. economy appears to be on solid footing, despite an underwhelming finish to 2016 and slow start in 2017. Business investment and manufacturing activity continue to lag, but industry confidence indices point to an improved investment picture during the second half of the year. Overall, the U.S. economy is projected to grow 2.5 percent in 2017—similar to 2014 and 2015, but a significant improvement over 2016.
• Bolstered by a tightening labor market, healthy consumer spending, improved growth in international markets and the potential for broad-based domestic regulatory reform, the U.S. economy has reason for cautious optimism in 2017. However, economic headwinds, including risks associated with weak export growth, industrial sector sluggishness and government gridlock should temper expectations.

Download the full report at www.leasefoundation.org/research/eo/.