2022 Economic Outlook Forecasts 4.6% Expansion in Equipment & Software Investment Growth

WASHINGTON (Dec. 15, 2021) — Low financial stress, an expanding housing sector and increased federal spending on infrastructure are expected to propel equipment and software investment growth of 4.6% for 2022. Annual U.S. GDP growth for 2022 is forecast at 3.5%, according to the 2022 Equipment Leasing and Finance (ELFA) U.S. Economic Outlook. The Foundation’s report, which is focused on the nearly $1 trillion equipment leasing and finance industry, highlights key trends in equipment investment and places them in the context of the broader U.S. economic climate.

Nancy Pistorio, foundation chair and president of Madison Capital LLC, said, “This report provides a thorough examination of the wide range of conditions that will impact the U.S. economy and business investment next year. Despite uncertainty around new COVID variants, ongoing supply chain issues and inflation, positive factors should outweigh the headwinds. Robust consumer demand, a strong labor market and increased equipment and software investment — the lifeblood of the equipment finance industry — look promising. We can look forward to ‘getting back to business’ in 2022, provided supply chain issues ease significantly and the pandemic is effectively curbed.”

Highlights from the 2022 Outlook include:

• While equipment and software investment is forecast to grow 4.6% (annualized) in 2022, supply chain constraints, high inflation, and tighter monetary policy are key headwinds to growth.
• The U.S. economy slowed in fall 2021 as the pandemic worsened and supply chain constraints snarled global trade and drove inflation to multi-decade highs. However, growth in Q4 has likely rebounded, and the economy appears poised for an above-average year in 2022.
• The U.S. manufacturing sector should continue to expand at a healthy rate in 2022, although supply chain issues, hiring difficulties, and high inflation could dampen industrial sector output, particularly during the first half of the year.
• On Main Street, the outlook has grown increasingly cloudy. Small firms are more susceptible to surging input costs and labor scarcity than large firms, which may weigh on small businesses as the new year gets underway. On the positive side, consumer demand remains robust, and the winter months should be smoother this year than last.
• The Federal Reserve officials recently shifted their positions in response to new data and now acknowledge that inflationary pressures are likely here to stay.

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