Investment in equipment and software is projected to expand 4.3 percent in 2017, according to the Q4 update to the 2017 Equipment Leasing & Finance U.S. Economic Outlook released by the Equipment Leasing & Finance Foundation.

The new investment growth estimate, revised upward from 3.6 percent in the Q3 Outlook, is driven by the combination of continued elevated business confidence, a recovering oil sector, and the release of pent-up demand following lackluster investment growth in 2016. The report predicts that equipment and software investment will improve significantly from last year’s performance, even as uncertainties relating to tax and trade policy, along with heightened geopolitical tensions, create a mix of opportunities and risks.

The Foundation’s report, which is focused on the $1 trillion equipment leasing and finance industry, highlights key trends in equipment investment and places them in the context of the broader U.S. economic climate.

Ralph Petta, President of the Foundation and President and CEO of the Equipment Leasing and Finance Association, said, “Continued strong fundamentals in the U.S. economy together with low interest rates and an optimistic business sector provide the ingredients for a vibrant, healthy equipment finance industry in 2017. Despite Washington policy makers’ inability to coalesce around major initiatives designed to spur economic growth even further, equipment finance professionals in a variety of markets report strong and stable origination volume. Certain distressed industry sectors are slowly recovering, giving rise to a positive outlook for the remainder of the year.”    

Highlights from the study include:

•   2017 capital spending remains on solid footing as businesses are confident and interest rates remain low. Overall, equipment and software investment is expected to expand by 4.3% in 2017 after a solid growth in both Q1 and Q2 of 4.5% and 8.3%, respectively.

•   Credit market conditions remain relatively healthy, despite a moderate decline in credit demand over the last quarter. Lending standards are mostly unchanged, but demand for credit fell across multiple consumer and business loan types. However, portfolios are exceptionally strong and financial stress is muted.

•   2017 is projected to be another year of moderate economic growth. A strong labor market, healthy consumer spending, and improved private sector investment have powered the U.S. economy throughout the year, despite subpar residential investment and decreased government spending. Overall, the U.S. economy is projected to grow 2.3%—a slight decrease from the Q3 forecast, yet well above 2016’s 1.5% growth rate.