U.S. economy will grow by 2.7%.

 

ELFF Industry Snapshot: U.S. Economy Projected to Grow by 2.7%

JAN 7, 2025 - 5:56 am

The Equipment Leasing & Finance Foundation released the 2025 Equipment Leasing & Finance Industry Snapshot, which summarizes the current conditions and projections for the U.S. economy and equipment finance industry.

Among the wide range of details in the Q1 2025 Snapshot:

• The foundation projects that the U.S. economy will grow by 2.7%.
• The U.S. economy expanded at 2.8% (SAAR) in Q3/24, a slight decrease from 3.0% growth in Q2/24.
• Three key factors boosted the U.S. economy in 2024 and set the stage for continued economic growth in 2025: a strong labor market, rising household wealth and resilient consumer spending.
• Economic tailwinds:
  • Q3/24 growth was primarily driven by consumer spending, supported by a boost in government spending and business investment.
  • Economic headwinds include negative growth in private inventories, residential investment and net exports.
  • Equipment and software investment is expected to grow at a 4.7% annualized pace in 2025.
  • Equipment and software investment expanded 7.5% in Q3/24 (annualized) after growing 7% in Q2/24. Growth was positive in seven of 12 tracked verticals.
  • Moderate growth is expected during the first half of the year with upside potential later in the year if inflation cools further toward 2%, and the Fed responds by further lowering interest rates.
• By equipment type:
  • Six of 12 verticals are exhibiting recent momentum that is stronger than historical norms, including computers and mining & oilfield machinery.
  • Investment growth in other industrial equipment and trucks appears set to shrink in the coming six months.
  • New business volume growth reported in ELFA’s CapEx Finance Index (formerly the MLFI-25) in October was up 11.9% Y/Y, 5.1% M/M, and up 3.7% YTD, outpacing the rate of inflation.
• Special Topic – Trump’s Second Term, An overview of three key policy areas in the new administration:
  • Tariffs: As an economic strategy, economic consequences and retaliation and uncertainty and opportunities
  • Taxes: The 2017 Tax Cuts and Jobs Act, impact of new legislation on investment and potential long-term implications
  • Industrial Policy: Policy priorities are likely to shift regarding renewable energy, domestic manufacturing and infrastructure development projects, with the effect on equipment demand unclear.