The Alta Group 2025 Insights

At its outset, 2024 was expected to be a year of slower growth. While growth was somewhat uneven throughout the year, the long-term trend was positive. Much of the year was a waiting game, as uncertainty about the outcome of the U.S. elections and the direction of the Federal Reserve’s action on interest rates caused companies and investors to hold back on capital expenditures.

Although plenty of uncertainty remains, November brought a clearer picture, and the market’s reaction was evident. The Equipment Leasing & Finance Association’s (ELFA) November 2024 CapEx Finance Index (formerly the Monthly Leasing & Finance Index) revealed a 0.7% increase in new business volume from October to November for the 25 equipment finance companies representing a cross-section of active banks, captives, and independents. That marked three consecutive months of expansion and brought year-to-date volume growth to 4.2% in November, up from 3.7% in October.

The Equipment Leasing & Finance Foundation’s Monthly Confidence Index rose to the highest level since August 2021 in November and continued that upward climb in December, rising from 67.5 to 68.8 in the final reporting period of the year. Evidence of such strong growth in an environment of inflated prices and higher borrowing costs demonstrated the industry’s impressive resilience.

A year ago, many were predicting a recession at some point in 2024, but the economy showed remarkable durability. The Federal Reserve Bank of New York’s calculated probability of a recession consistently declined in the final months of 2024. At the end of December, the index showed a 29.4% probability of a recession in the next 12 months, compared to 42% in November and 57% in September—and less than half of the 62.9% probability posted one year earlier.

The election results should promote customer demand for equipment financing. In addition, the new administration’s priorities—including a reduced corporate tax rate, a less restrictive regulatory environment, and potentially lower interest rates—bode well for volume demand.

Jim Jackson
Co-CEO at Alta Group

U.S. annual GDP growth is now expected to be between 2.2% and 2.7% in 2024—higher than forecast at the start of the year when predictions were more conservative due to concerns about slowing economic momentum and tighter monetary policy. Current forecasts call for GDP growth to slow slightly in 2025, coming in at or just over 2%.

2025 appears poised to bring a pro-growth environment that will have a positive impact on capital expenditures. At the same time, things will be dynamic and potentially volatile. Equipment finance leaders need to be nimble, ready to act quickly, and adjust as conditions evolve.

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