Stronger economic conditions continue in the USA but confidence slips

The latest survey from the Equipment Leasing & Finance Foundation shows a fall in confidence.

The May 2018 Monthly Confidence Index found confidence in the equipment finance market eased further in May to 64.6, down from the April index of 68.3.

Asked to assess their business conditions over the next four months, 22.2% of executives responding said they believe business conditions will improve over the next four months, a decrease from 33.3% in April.

More than a quarter (29.6%) of survey respondents believe demand for leases and loans to fund capital expenditures will increase over the next four months, a decrease from 46.7% in April. 70.4% believe demand will remain the same during the same four-month time period, an increase from 50% the previous month. None believe demand will decline, a decrease from 3.3% in April.

In response to questions about the current US economic conditions, 22.2% of the leadership evaluate the state of the economy as "excellent", down from 30% last month. 77.8% of the leadership evaluate the current U.S. economy as "fair," up from 70% in April. None evaluate it as "poor," unchanged from last month.

MCI-EFI survey respondent Michael Romanowski, president, Farm Credit Leasing Services Corporation, says: "Customers are continuing to work through the impacts of tax law changes and making decisions on how best to finance capital investments. Projects are beginning and we anticipate an increase in purchase leaseback activity in the last quarter of the year."

"Demand is strong this spring," says Valerie Hayes Jester, president, Brandywine Capital Associates. "Small business seems determined to move forward and to keep investing in equipment that will produce income. In spite of the manic performance of Wall Street and the ongoing drama in Washington, Main Street America continues to stay the course."

Harry Kaplun, president, Specialty Finance, Frost Bank, notes that "stronger economic conditions continue, and in spite of deterrents like rising interest rates, the advantages of tax reform offset them".

The Equipment Leasing & Finance Foundation argues that confidence in the US economy and the capital markets is a critical driver to the equipment finance industry. "When confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment, and durables and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising," it explains.