The Equipment Leasing and Finance Association expects U.S. private investment in equipment and software to exceed $2 trillion in 2023. It’s one of many events that will impact the US economy next year.
Equipment purchase continues to drive supply chains across all U.S. industrial and service sectors. Slower economic growth drives the patterns this year. In order to purchase the productive assets necessary for operation and growth, almost eight out of ten U.S. enterprises presently employ equipment leasing and financing.
Let’s look at the collated data and comments from the industry to identify the most important trends in machinery for the year 2023.
1. Growth in the United States will be slow.
Although GDP growth picked up in the second half of 2022, underlying issues such as a weak property market, unpredictable financial markets, and a declining global economy are still cause for concern. GDP growth is predicted to slow to 0.9% (annualized) in 2023 as a slight recession sets in about the middle of the year.
2. Investment expenditure growth will continue to decelerate.
Capital expenditures rose 12% annually in the third quarter of 2022, laying the groundwork for the year ahead. While investment in machinery and computer programs has been growing steadily since the epidemic began, it is anticipated to slow this year to 4.2% due to increasing interest rates, high inflation, and other economic worries.
3. No matter how high-interest rates go, the financial system will tighten.
The Federal Reserve is anticipated to keep fighting inflation this year, raising interest rates to at least 5% and maybe higher despite the likelihood of a slowdown in economic growth. The Fed’s diminishing balance sheet will contribute to tighter financial conditions even if rate rises slow down or stall later in the year.
4. The bulk of the capital outlay for new machinery will be covered by loans.
More than half (55%) of projected equipment financing in 2023 will include some kind of financing. Leases, secured loans, and lines of credit are used by eight out of ten companies when making purchases. Financing will be driven mostly by end users’ need for obsolescence protection, tax benefits, and cash flow efficiency. To quickly get approved for such a loan, follow the link:https://www.gofundshop.com/equipment-financing/.
5. Companies will invest in technology and machinery to offset rising labor costs.
Automation and other labor-saving technology will increase in some industries to reduce their reliance on humans. Long-term benefits include lower inflation and higher economic output.
6. Equipment purchases will be simpler as usual due to delays in the supply chain.
Equipment delivery delays or shortages should decrease this year as supply chain backlogs have reverted to historical trends. The combination of rising temperatures and better public health has created an opportunity for lagging providers to catch up.Due to global supply chain disruptions, some multinational firms have nearshored and/or reshored elements of their supply networks.
6. Despite sluggish economic development, many varieties of equipment will do well.
Even as the pandemic’s effects continue to hurt the economy, certain equipment will be in demand. Hybrid work alternatives include computers, software, office equipment, and communication tools after the epidemic. Air passengers will return to the skies as supply chains unravel in the new year. One potential industry for 2023 is medical equipment.
7. Investment in machinery will get a boost from federal expenditure.
Three important congressional bills that authorize at least $600 billion in new financing for a variety of industrial and infrastructure projects might drive equipment investment. The five-year funding from these initiatives will stimulate American manufacturing and equipment demand through 2023 and beyond.