Economic Outlook: What to Expect for 2024
Marked by unexpected twists and turns, the past year has been nothing short of eventful for the U.S. economy. Despite initial concerns, the resilience of consumers and labor market steered away from recessionary waters in 2023.
Looking ahead this year, it’s essential to anticipate the continuation of prevailing trends while remaining cautious to emerging forces shaping the economic landscape. Projections point towards a gradual slowdown in overall economic growth, tempered equipment and software investment expansion, and a continued easing of inflationary pressures.
Yet, a few growing trends demand close attention, poised to exert significant influence on both the broader economy and the equipment finance industry in the coming months. Here’s a look at them and their potential impacts:
INTEREST RATES
Interest rates are anticipated to decrease in 2024, although not to the extent predicted by the markets. Aligned with the Federal Reserve’s stance of “higher for longer,” we deem this the most suitable approach to prevent the resurgence of inflationary pressures.
Potential Impact: With rising equipment costs, consumers should not wait for a better rate.
FORECAST FOR FINANCE
While the potential for relief in the form of declining interest rates in the latter half of the year exists, its realization hinges on the mitigation of inflationary pressures, which remains uncertain. Equipment Leasing and Finance Association President and CEO Leigh Lytle states, “The resilient U.S. economy and opportunities for growth and greater efficiencies underlie the trends this year as equipment acquisition continues to drive supply chains across all U.S. manufacturing and service sectors.” In 2024, more than half of equipment acquisitions are forecast to be financed.
Potential Impact: Financing will be the most beneficial option compared to outright purchase of equipment.
BANKS SCALE UP
Indications suggest a shift towards heightened activity in bank mergers and acquisitions this year. Banks scale up in part to manage increased regulatory costs more efficiently. New restrictions and requirements will put additional pressure on small and mid-size banks to lend less on stricter terms, and the cumulative effect of these rules, combined with slower economic growth, could lead to more consolidation.
Potential Impact: Consumers gain more flexible financing options with independent lenders to meet their needs.
In this dynamic economic environment, adaptability and foresight are indispensable for navigating uncertainties and capitalizing on opportunities. By staying attuned to evolving market dynamics and proactively responding to emerging challenges, partners can position themselves for resilience and success amidst the ongoing economic transformations. As we venture forth into 2024, reach out to explore all finance and lease options that contribute to long-term financial stability and partnerships.
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