Lower taxes, less regulation and rising interest rates will be the catalyst to spur capital asset acquisitions, according to one equipment finance company. (Photo by Sean Kilcarr for Fleet Owner)

Outlook brightening for U.S. businesses

Jan. 19, 2017
Leasing group, other sees confidence increasing in the equipment finance sector and the nation’s business community as a whole.

The Equipment Leasing & Finance Foundation (ELFF) noted that Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) for January indicates confidence is increasing in the equipment finance market, with its MCI-EFI metric climbing to 73.4 this month; an increase from the December index of 67.5 and the highest reading for this index since its launch back in May 2009.

“The outlook for U.S. companies has become much more positive since the presidential election,” noted Thomas Jaschik, president of BB&T Equipment Finance and one of the respondents to the monthly MCI-EFI survey.

“Lower taxes, less regulation and rising interest rates will be the catalyst to spur capital asset acquisitions,” he added. “This will undoubtedly set the stage for robust equipment finance activity.”

Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, noted a similar strain of optimism is permeating the U.S. business community as a whole.

Tom Donahue

“At this moment of significant transition for our country, the American business community is optimistic about the year ahead—optimistic [yet] also realistic about the hard work that will be required to make our optimism a reality,” he explained during the Chamber’s annual state of industry presentation last week.

The Chamber is forecasting modestly improved gross domestic product (GDP) growth for the U.S. in the range of 2% to 2.5% for 2017, with inflation expected to “remain subdued” this year, perhaps just above the Federal Reserve’s target of 2%.

“We’re optimistic because even in the eighth year of an aging recovery there are no visible signs of another recession,” Donohue noted in his remarks.

“We expect the economy to continue to grow modestly in 2017 … because the housing market is healthy, energy prices have stabilized, inflation is under control, stock markets are performing well, and consumer and business confidence have improved,” he added.

“Most of all, business is optimistic because we see a once-in-a-generation opportunity to enact major reforms that could transform the American economy from a low-growth to a high-growth economy,” Donohue said.

In terms of the MCI-EFI metrics recorded for January, ELFF said several key readings stood out:

  • When asked to assess their business conditions over the next four months, 74.2% of executives responding said they believe business conditions will improve over the next four months, an increase from 48.4% in December.
  • Some 71% of respondents to the ELFF’s survey believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 38.7% in December. 
  • Though 35.5% of the executives polled by ELFF said they expect to hire more employees over the next four months, 61.3% expect no change in headcount over the next four months – an increase from 48.4% last month.
  • Finally, 61.3% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, and while that is a decrease from 71% in December, some 38.7% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months – an increase from 25.8% in December.
  • More importantly, none of the executives polled by ELFF this month now believe economic conditions in the U.S. will worsen over the next six months; a decrease from 3.2% who believed so in December.
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