Q4 2024 US economic outlook forecasts steady growth

The US economy is projected to maintain steady growth in the coming months, fuelled by solid investments in equipment and software, according to the Q4 update of the 2024 Equipment Leasing & Finance US Economic Outlook.

Released by the Equipment Leasing & Finance Foundation and prepared by Keybridge Research, the report forecasts a 4.4% growth rate in equipment and software investment this year, along with a 2.7% GDP growth—an increase from the Q3 projection. The report’s findings suggest a resilient economy with promising indicators for 2025, despite near-term challenges.

“The US economy has been impressively resilient but heightened political and economic uncertainty, as well as weather-related business interruptions, are likely to slow investment growth in Q4.”

Key takeaways from the Q4 update reveal that equipment and software investments rebounded robustly in Q2, following three quarters of stagnation, showing a 7.0% annualised growth. This recovery was primarily driven by increased aircraft and information processing equipment investments, though industrial equipment experienced modest contraction. The economic expansion in Q2 saw a 3.0% annualised growth rate, an improvement from the 1.6% growth in Q1.

The report points out several challenges that could influence growth, including a sluggish manufacturing sector, which has seen consistent contraction. Manufacturing employment has declined by 50,000 workers in 2024, as core capital goods orders and shipments have remained sluggish. Additionally, rising geopolitical concerns, labour market adjustments, and uncertainties surrounding the 2024 election have led small business owners to adopt a cautious stance.

However, the economic outlook remains cautiously optimistic, bolstered by expectations of a gradual easing in Federal Reserve interest rates. The Fed has recently cut rates by 50 basis points, referring to this action as a “recalibration” rather than a reaction to labour market concerns. With inflation largely contained, the rate cut is anticipated to support hiring and investment in the coming year, paving the way for sustained growth.

The Foundation also highlights sector-specific forecasts over the next six months through the Equipment & Software Investment Momentum Monitor, which tracks 12 verticals in equipment and software. Notable trends include an expected decline in agriculture machinery investment, modest improvement in materials handling equipment, and growth in computers and software investment. Aircraft, ships, and boats are projected to see continued investment growth, while the outlook for trucks and industrial equipment remains subdued.

As businesses and investors look toward 2025, the Foundation anticipates that economic growth will pick up as the impact of rate cuts is felt and election-related uncertainties subside. The Q4 Economic Outlook, available for free on the Foundation’s website, sets a cautiously optimistic tone, emphasizing resilience and strategic adaptation amid potential headwinds.