- ELFF now forecasts U.S. equipment and software investment growth of 9.9% in 2025, driven primarily by AI and data-center spending.
- The 2025 real GDP outlook was revised up to 2.0% as investment strength and resilient consumers offset softer labor and inflation concerns.
- Near-term gains are expected in construction, agricultural, and energy/electrical equipment, while industrial equipment may stagnate or contract.
- Tailwinds include tax and rate relief plus regulatory support, but risks rise if inflation, labor weakening, or an AI-investment slowdown hits.
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The Q4 2025 Economic Outlook from the Equipment Leasing & Finance Foundation shows a notable realignment of expectations. Earlier in the year, capital investment in equipment and software was predicted to rise by just 6–7%; now it’s revised to nearly 10% growth. This upward shift is anchored to broad-based investment in high-tech and software, especially those tied to the AI build-out and data center construction.
In parallel, the GDP forecast for 2025 has been raised to 2.0%, reflecting contributions from both robust investment in tech sectors and persistent consumer demand. Notably, in Q2 of 2025, the U.S. economy rebounded with 3.8% growth, having contracted −0.6% in Q1. While consumer spending improved over summer, concerns linger about labor market softness and inflation.
Vertical sector outlooks are differentiated: construction and agricultural machinery are expected to accelerate; energy and electrical equipment are also seen as gaining momentum. In contrast, industrial equipment may “remain subdued and may contract,” while medical equipment growth may moderate. Technology and transportation equipment investment should stay solid, although perhaps not at expansionary rates.
Strategic tailwinds include AI infrastructure demand, favorable tax treatment (e.g., expensing and interest deductibility), lower interest rates, and pro-growth regulation. But risk factors are real: inflation remains elevated, labor markets show weakening, and under-investment outside of AI sectors may expose vulnerabilities if AI spending slows or if external shocks (e.g., higher rates, supply chain disruptions) emerge.
From a deal-making perspective, fixed-asset intensive industries stand to benefit from strong investment and favorable financing conditions. Lenders and lessors may see expanding opportunity in data centers, construction equipment, agricultural machinery, and energy-adjacent capital goods. However, industrial OEMs, medical equipment producers, and related finance providers should prepare for more constrained demand in certain segments. Also, the rising importance of AI build-out suggests scrutiny of behind-the-scenes risks—like power infrastructure, component supply, and valuation excesses—will become more central in underwriting and M&A.
Open questions remain: how sustainable is AI-capital spending once first-mover programs complete? Will inflation and labor constraints force a rebalancing of growth projections? And what impact will policy shifts (tax, trade, regulation) have, particularly if macroeconomic headwinds intensify?
Supporting Notes
- The ELFF revised its 2025 equipment & software investment forecast to 9.9% growth, up from 6.3% in mid-2025.
- U.S. GDP forecast for 2025 uplifted to 2.0%, up from previous estimates of ~1.3%.
- In the first half of 2025, six of seven equipment verticals tracked posted year-over-year gains; technology equipment & software and transportation equipment led most expansion.
- Over next six months, expectations include rising growth for construction machinery, agricultural machinery, and energy/electrical equipment; industrial equipment may lag or contract.
- AI-related investment, especially data center and information processing equipment spending by large tech companies, is a significant driver of recent investment growth. Investment in information processing equipment contributed more to economic growth from January through June than consumer spending.
- Other risk indicators: weakening labor market, rising inflation, and moderating growth in medical equipment, as well as industrial equipment likely to underperform.