U.S. Equipment, Software Investment Sank but Forecasted to Return: Q4 2020 Snapshot

WASHINGTON, DC–The Equipment Leasing & Finance Foundation has released the Q4 2020 Equipment Leasing & Finance Industry Snapshot, an indispensable resource for industry participants in the midst of the COVID-19 pandemic.

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:

• The U.S. economy nosedived at an unprecedented 31.4 percent annualized rate in Q2 2020, driven by a collapse in consumer spending, particularly in high-contact service industries. Although Q3’s annualized growth will be exceptionally strong given the historic contraction in Q2, a full recovery by the end of the year is highly unlikely;
• Investment fell 46.6 percent (annualized) in Q2, an unprecedented collapse. Business investment dropped 27.2 percent (annualized), the worst quarter since the 1950s;
• Equipment and software (E&S) investment collapsed 27.7 percent (annualized) in the second quarter, the sharpest decline since the Great Recession. However, E&S investment is forecasted to return to positive territory during the second half of 2020;
• Among the range of COVID-19’s impacts on businesses are an expanding service industry after bottoming out in early spring, a severe effect on commercial real estate as a result of the shift to work-from-home, a resurgence in demand in the housing industry, and a thriving online retail sector as consumers shy away from in-person retail stores;
• Equipment finance industry confidence has returned to pre-pandemic levels, although public policy uncertainty remains elevated after spiking at the onset of the pandemic; and
• New business volume growth reported in the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index contracted 24 percent year-over-year in August, driven by soft demand for certain industry verticals. However, cumulative new business volume for the year is down only 4.3 percent from a year ago.

The Snapshot was prepared by Keybridge Research through a commissioned grant by the Equipment Leasing & Finance Foundation.