At least according to the news media, there is generally a sense of overall economic improvement. The unemployment rate for both October and November came in at 5.8%, the lowest it’s been since July of 2008. Oil prices continued to decline, resulting in lower prices at the gas pump. Analysts predict that these factors will yield a very robust holiday buying season, projected to exceed last year’s numbers by as much as 4.1%.
The big question now is where do we go from here and what can we expect in 2015? Here are some insights from well-respected sources about what the upcoming year might have in store for the business equipment industry.
1. Section 179 Is Approved—But Only For 2014
An extension to Section 179 was passed by the House of Representatives on December 3rd, was approved by the Senate on December 17th and was finally signed by President Obama on December 19th. Although many observers believed that Section 179 would finally become a permanent part of the tax code with this years vote, it was instead—and once again—only extended temporarily. Now signed into law, Section 179 will be applied retroactively to January 1, 2014 and will once again expire at midnight, December 31, 2014. If equipment buyers rush to take advantage of the Section 179 deduction before the year ends, dealers might want to consider implementing their own promotions and incentives to help drive sales during Q1 and Q2 2015.
2. Oil Prices Will Continue To Decline
Oil prices are expected to continue to decline throughout 2015 (and into 2016 as well), which will benefit both consumers and businesses. The decline in both fuel and transportation costs will improve profitability for businesses which might, in turn, stimulate the willingness to invest in plant and equipment.
3. Equipment And Software Investment Will Grow
Investment in equipment and software is expected to grow 6% in 2015, according to the Equipment Leasing and Finance Foundation Annual Outlook for 2015. This growth will be driven by a steadily increasing economy. The ELFF report is focused on the $903 billion equipment finance industry and evaluates how various industry and external factors will affect growth over the next 12 months.
4. Credit Will Be Readily Available
As we move into 2015, the demand for credit, along with the available supply across multiple sectors, are both increasing. This is primarily due to the steadily improving economy. Although there is still some vestigial uncertainty coupled with lasting scars from the financial crisis of several years ago, confidence—of both businesses and consumers alike—is also increasing. This means that credit worthy customers who are seeking capital for investment in equipment will easily be able to finance what they need.
5. There Is Plenty Of Money To Lend As The Economy Expands
The economy as a whole will continue to accelerate in 2015, allowing plenty of capital for investment. The annualized Gross Domestic Product (GDP) for 2015 is projected at 3.1%, a significant increase from the 2014 rate of 2.2%. This increase will be driven by the falling unemployment level as well as increasing confidence in the economy.
Ultimately, 2015 will be what you make of it. Based on the above information, things are moving in your favor. There are of course pitfalls—there always are and there always will be. But we’ve come a long way in the last five years and the future looks bright.
Although the continuation of Section 179 will not be a factor—at least for now—in 2015, it might well serve to create some solid sales momentum moving into the New Year. As oil prices decline, along with the unemployment rate, the rapidly accelerating economy will spur demand—your customers will be eager to buy new equipment and software. With plenty of credit and investment capital available, customers will be able to acquire what they need without having to worry about how to pay for it.
The factors are all aligned for 2015 to be a banner year for equipment vendors.