The projected rate of growth in equipment and software investment for 2012 is 6.7%, a substantial decrease from the 2011 rate of 11%, this according to the findings of the Equipment Leasing & Finance Foundation for their Q4 outlook. Other findings from 2012 revealed a rate of 4.8% in Q2, down from 5.1% in Q1. The loss of momentum has been steady thus far in 2012, but is expected to stabilize throughout the remainder of the year.
Equipment Leasing And The US Economy
Equipment Leasing & Financing Association President William G. Sutton was quoted as saying “While growth in equipment and software investment is continuing, the pace of growth has decelerated. This finding aligns with our Monthly Leasing and Finance Index, which indicates that equipment finance activity is still growing, but at a much slower rate than in 2011.”
Some of the key findings of the group include the news that the US economy continues to grow, albeit at a much slower rate than would normally be ideal, with weaker than predicted job creation over the last three months.
In 2013, natural cycles of activity, mainly the housing market, are expected to gain traction and stabilize, driving growth throughout the industrial world. The initial projection for future growth in equipment leasing and financing was initially projected to be around 8%, however that figure has been modified to a more reasonable expectation of around 4.8%
There are also a number of measurable trends in equipment investment, indicating that such investment should grow somewhere on the order of 5-9% in Q4, and that while growth in transportation equipment is very likely to moderate, it should remain above 15% over the next 4 to 6 months.
The Long Term Picture
Agricultural equipment investment is expected to see a decline of 5 to 10% over the next six months, while computer and software equipment investment is projected to grow at a fairly anemic 1 to 3%. Medical equipment investment remains similarly stunted, with 1 to 2% growth. The strongest showing is for construction equipment, which should continue at around 15% as the housing market continues to improve.
Conditions in the credit market remain in a state of flux, mostly reacting to Federal Reserve policy as well as the latest events occurring overseas. These tensions are expected to abate somewhat as we enter 2013, with US interest rates increasing slowly as the “flight to quality” trend slowly unwinds itself.
Overall, the US economy slowed in the second quarter of 2012, down to an annualized rate of 1.3%, down from 2% in Q1. The outlook for 2012 has never changed in any substantive way, with real GDP growth holding at 2.2% and inflation expectations dropping from 2.3% to 2.1%.
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