Report: 2021 economic outlook forecasts 11.2% expansion in equipment, software investment

Report: 2021 economic outlook forecasts 11.2% expansion in equipment, software investment

With U.S. vaccination rates rising quickly and the end of the pandemic in sight, equipment and software investment growth is expected to be robust this year as businesses invest to adapt to a post-pandemic normal, a recent report suggests.

Annual equipment and software investment growth of 11.2% is forecasted for 2021, and annual U.S. GDP growth for 2021 is forecasted at 5.7%, according to the Q2 update to the 2021 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation.

The foundations says highlights from the Q2 update to the 2021 outlook include:

  • The equipment and software investment growth forecast of 11.2% benefited from a 21% surge in Q4 2020, which provided a strong jumping-off point for 2021.
  • The U.S. economy expanded at 4.3% (revised) annualized rate in Q4 2020 as the nation struggled with surging COVID-19 cases and deaths. Although the labor market recovery is still far from complete and the K-shaped recovery has left millions of consumers in a precarious position, the overall balance of risks is on the upside.
  • The U.S. manufacturing sector continued to improve in early 2021 due to strong demand for both consumer and business goods. Underlying demand remains strong, although supply chain backlogs should be monitored and rising input prices could become an increasingly significant concern in the months ahead.
  • Main Street managed to weather the winter months and the third wave of the pandemic, although not without significant difficulty. Further federal relief and stimulus efforts have played an outsized role in the survival and longer-term viability of many businesses. Warmer weather, rising vaccination rates and the relaxation of pandemic-era operating restrictions offer hope that there are better days ahead.
  • The Federal Reserve again confirmed its commitment to keeping interest rates at zero until at least 2023. The Fed also ended a pandemic-era capital requirement relief measure that could cause turmoil in bond markets.
  • Headwinds to keep an eye on include the potential for higher inflation, the ongoing labor market recovery, and the emergence of new virus strains that could reduce the effectiveness of existing vaccines.

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