As businesses across the country continue to invest during the post-pandemic recovery, annual equipment and software investment growth of 13.3% is forecast for 2021. Annual U.S. GDP growth for 2021 is forecast at 6.1%, according to the latest release of the 2021 Equipment Leasing & Finance U.S. Economic Outlook from the Equipment Leasing & Finance Foundation.
Scott Thacker, Foundation chair and chief executive officer of Ivory Consulting Corp., said, “The Q3 update indicates that America is now opening for business quickly. The evidence illustrated in the Outlook points to a booming economy for the second half of the year as long as the pandemic remains in check, and despite several potential headwinds which must be monitored carefully. In the shorter term, strong growth for both the economy and the equipment finance industry are expected to be realized this summer.”
Highlights from the Q3 update to the 2021 Outlook include:
- Equipment and software investment benefited from an 18% surge in Q1, and is well above its pre-pandemic level.
- The U.S. economy expanded at a robust 6.4% (revised) annualized rate in Q1 2021, an acceleration from Q4 2020. Q1 GDP was just 0.9% below its level at the end of 2019, indicating that the economy exceeded its pre-pandemic level in Q2.
- The U.S. manufacturing sector is still facing record levels of demand, even as the pandemic hamstrings key manufacturing centers around the world. However, industrial output in the U.S. has been constrained by acute shortages of key inputs and elevated prices.
- “Main Street” has emerged from the pandemic having suffered less damage than many expected, in part due to historic federal relief efforts. Consumers are spending again, capacity limits and distancing requirements have largely been lifted, and the outlook is as bright as it has been since the pandemic began.
- Federal Reserve officials have, for the most part, reached consensus agreement that inflation pressures will prove to be transitory. However, given the speed and magnitude of the economic rebound, the Fed has hedged a bit and signaled that rate hikes could begin in 2023.
- While the outlook is mostly positive, notable headwinds remain, including two — supply chain issues and services exports — that stem from the rest of the world’s continued struggles with COVID-19 and comparatively slower vaccination push. Additionally, the risk of sustained high inflation and the expiration of federal support measures are key factors to watch this summer and fall.