Posted December 20, 2023

Soft landing in 2024

2024 Economic outlook forecasts 2.2 percent expansion in equipment and software investment, 1.7 percent GDP growth. 

The U.S. economy likely averted a recession in 2023 and appears to be on track for a soft landing in 2024, according to the 2024 Equipment Leasing & Finance U.S. Economic Outlook

Real equipment and software investment growth is projected to be 2.2 percent next year — slightly slower than the growth rate experienced over the last 12 months — with stronger investment activity expected in the latter half of the year.

The report, which was prepared by Keybridge and released today by the Equipment Leasing & Finance Foundation, also forecasts real GDP growth to be 1.7 percent in 2024, down from an estimated 2.4 percent in 2023. 

The Foundation's report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate.

“The Foundation’s annual outlook demonstrates that the economy has thus far managed to ‘thread the needle’ by maintaining solid growth in the face of higher interest rates while inflation returns to more acceptable levels. However, it also reveals that we’re not out of the woods yet, and a recession is still possible during the first half of the year. Overall, while breakout growth in equipment and software investment looks unlikely in 2024, the prospect of lower interest rates and acceptable inflation levels should keep the industry on sound footing,” says Zack Marsh, foundation chair and senior vice president, accounting and analysis, AP Equipment Financing.

Highlights from the 2024 Outlook include: Equipment and software investment growth expanded at a sluggish 0.5 percent rate (annualized) in Q3 after growing 7.0 percent annualized in the previous quarter. Elevated interest rates will continue to drag on investment in 2024, and the climate for near-term investment is still relatively weak. The Foundation expects modest growth in Q4 and the first half of 2024 but anticipates a pick-up in investment activity during the second half of the year.

  • The U.S. economy likely averted a recession in 2023, expanding a robust 5.2 percent annualized in Q3 as the labor market proved surprisingly resilient to higher interest rates and consumers continued to spend. Inflation has been brought to more acceptable levels without triggering widespread job loss, and the combination of a healthy labor market, cooling inflation and improved consumer sentiment make a soft-landing scenario increasingly likely. Still, it is premature to declare victory: high government expenditures contributed much more to GDP in 2023 than they will in 2024, consumer spending may soften amid rising financial stress, and global economic conditions remain weak.
  • The manufacturing sector stagnated in 2023, and many of the same challenges U.S. manufacturers faced are likely to persist in 2024. High interest rates continue to weigh on capex plans, the U.S. economy is unlikely to experience the same pace of growth, and global demand also appears to be soft. However, a continued influx of federal dollars should boost some industries, including semiconductors and clean energy.Main Street businesses have benefitted from strong consumer spending over the last two years, outperforming expectations. However, small business owners are increasingly pessimistic about near-term sales revenue and concerns that consumers may be finally starting to pull back.
  • The Federal Reserve held interest rates steady at its most recent meeting, with rates at 5.25 to 5.5 percent. Inflation has fallen significantly over the last six months, and if economic growth weakens significantly in late 2023 and early 2024 as expected, Fed officials may feel pressure to begin cutting rates in the spring, particularly if inflation remains in the 3 percent range.

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. This month four verticals are expanding, none are peaking, five are recovering, and three are weakening. Over the next three to six months the Foundation expects the following trends to materialize on a year-over-year basis:

  • Agriculture machinery investment growth should return to positive territory.
  • Construction machinery investment growth is likely to remain positive.
  • Materials handling equipment investment growth should improve. 
  • All other industrial equipment investment growth will likely weaken.
  • Medical equipment investment growth will likely remain subdued, though recent movement in the Index is encouraging.
  • Mining and oilfield machinery investment growth will likely remain weak or negative.
  • Aircraft investment growth will likely remain positive.
  • Ships and boats investment growth will likely strengthen.
  • Railroad equipment investment growth will likely remain modestly positive.
  • Trucks investment growth may slow but should remain positive.
  • Computers investment growth should improve.
  • Software investment growth will likely remain solid.

The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides the U.S. macroeconomic outlook, credit market conditions, and key economic indicators. The report will be updated quarterly throughout 2024. 

Download the full report at