As we dig our way out of the COVID-19 muck, we look to a better future tempered by the certainty that the “new normal’ is going to be a lot different from what we’ve understood to be “normal” in the past.

No one, including yours truly, can lay claim to sufficient psychic power to see beyond the curtain of confusion stretched out in front of us, blinding us to any certainty about tomorrow or a day or two beyond. 

To help clear the view, we are looking at many sources. We talk with our members about conditions on the ground here in SoCal (surprisingly good, they say), but they don’t have a clear view of the future either. 

So we’ve had to go to people in the research business, like a fascinating report from the Equipment and Leasing Foundation, released April 15 (ironically, we had time to look through the document because “Tax Day” moved to July 15).

The Foundation Economic Outlook 2020 started with this grim forecast: “Owing to the substantial uncertainty stemming from both COVID-19 and the impact of social distancing measures on the U.S. economy, investment in equipment and software is projected to contract severely in 2020, to between -8.6 and -13.5 percent. “

“Similarly, the U.S. economy is expected to have its worst year in decades, with annual growth slowing to between -5.0 and -9.4 percent. While the economy will continue to suffer until the public health crisis resolves itself, expectations are that conditions may improve in the third and fourth quarters, which could produce strong annualized growth rates after a large contraction during the first half of the year. Nonetheless, the economy will be smaller at the end of 2020 than it was at the start.”

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, released in conjunction with the Economic Outlook, tracks 12 equipment and software investment vertical markets. In the markets of interest to our members, the report says that investment growth over the next three to six months will suffer: 

  • Expect weak construction machinery growth
  • Materials handling equipment is likely to remain negative
  • Agriculture machinery remains weak.
  • All other industrial equipment categories are likely to contract.
  • Mining and oilfield machinery will be contracting severely.
  • Trucks investment growth should further weaken and may enter contraction territory.

On the bright side, contractors looking to acquire new equipment to meet California Heavy-Duty Diesel requirements are finding pricing opportunities and accelerated tax advantages.

You can read both reports for free at:

//www.store.leasefoundation.org/cvweb/cgi-bin/memberdll.dll/openpage?wrp=libraryHome.htm

By Ray Baca Executive Director Email: [email protected]