Data: Table of Contents 2. Investment 3. Business

Transcript:Data: Table of Contents 2. Investment 3. Business:
Data: Table of Contents 2. Investment 3. Business Health 1. Overall Economy p. 3 2 p. 8 p. 11 Forecast Source: U.S. Bureau of Economic Analysis, Keybridge LLC 3 After expanding at a healthy rate in Q4, the economy contracted 1.6% (annualized) in Q1 due to weak exports and cooling consumer spending. Economy 30-Year Quarterly Average = 2.4% 29.1% -31.4% -0.5% +0.8% +1.1% +0.9% Real GDP Growth Annualized % Change from Prior Quarter The Q1 contraction was driven by a large decline in net exports, which offset strong E&S investment and solid consumer spending. 4 Source: U.S. Bureau of Economic Analysis, Keybridge LLC Economy HEADWINDS [-3.93] +1.12 GDP CHANGE [-1.57] +1.24 Consumer Spending Other Investment (-0.19) -0.51 -3.23 Net Exports Government Spending E&S Investment Tailwinds & Headwinds Contributions to GDP growth by sector Source: 2022 Q3 Equipment Leasing & Finance U.S. Economic Outlook 5 Top Economic Tailwinds ECONOMIC TAILWINDS Plentiful job openings and solid wage growth in several industries (e.g., retail and hospitality) have led to favorable labor market conditions. As of May, the private sector quits rate was 2.8%, just shy of a record high, while the layoff rate was a record-low 0.9%. Demand for workers remains strong and the economy has so far avoided the dreaded wage-price spiral. Strong Labor Market After adjusting for inflation, equipment investment was 9.5% above its pre-pandemic level in Q1, outperforming other major economic sectors. Unfilled orders in many end-use markets (e.g., industrial machinery, materials handling equipment, construction machinery, and computers) remain elevated, suggesting significant pent-up demand exists. Healthy Manufacturing Sector 6 Top Economic Headwinds ECONOMIC HEADWINDS The Russia-Ukraine war has added to lingering COVID-related supply chain disruptions, particularly impacting global energy prices. Retailers are now finding themselves stuck with unsold inventory, known as the “bullwhip effect,” which could add to future supply chain turmoil. In the near term, these developments are expected to reduce global economic growth and increase inflation. Snarled Supply Chains The Consumer Price Index was up 9.1% Y/Y in June, the highest reading since 1981, and has shown few signs of easing. Inflation is becoming increasingly embedded in service-sector prices, a concerning development that likely means higher inflation will be here to stay for longer. Surging Inflation Source: 2022 Q3 Equipment Leasing & Finance U.S. Economic Outlook 7 Additional Factors to Watch 2 FACTORS TO WATCH Source: 2022 Q3 Equipment Leasing & Finance U.S. Economic Outlook Projections for Key