Equipment Finance Industry Recession Monitor

Since mid-2022, talk of global recession has periodically boiled to the top of the economic and financial news cycle. Given the highest inflation in a generation, rapid interest rate hikes, bank failures, and wild swings in energy costs, the concerns are justified.

The Foundation, in partnership with Keybridge Research, has developed a new donors-only tool, the Foundation-Keybridge Equipment Finance Industry Recession Monitor, to help in your strategic planning efforts. Released quarterly to donors, the Recession Monitor tracks 12 high-frequency indicators that have a strong track record of independently anticipating a U.S. economic recession. By emphasizing sectors of the economy that are most relevant to the equipment finance industry, the tool is designed to anticipate when the industry is likely to start to “feel” a recession, even if the downturn has yet to fully materialize throughout the broader U.S. economy.

Current Assessment: Nine out of 12 indicators in the Foundation-Keybridge Equipment Finance Industry Recession Monitor are red, up from seven out 12 in September. All six “early warning sign” indicators are flashing red, while the six “imminent signal” indicators are split between green (3) and red (3). Consumer Confidence ÷ The Unemployment Rate (a measure of labor market health) and Capacity Utilization both flipped to red in Q4. Meanwhile, The C&I Loan Delinquency indicator improved in Q4, suggesting that business financial stress is still in a manageable state. All told, the imminent recession signals remain mixed.

Recession Forecast: While the odds of the overall economy achieving a “soft landing” and averting a recession have improved in recent months, the latest reading of the Foundation-Keybridge Industry Recession Monitor points to significant risk of recessionary conditions in the near term for the equipment finance industry.

Read the full report below for detailed information on the indicators, their historical recession thresholds, and their latest readings.

Out of the twelve recession leading indicators, nine are currently red (up from seven last quarter), and three are green, putting the economy in “Recession Warning” territory. Capacity Utilization changed to red in Q4 while the C&I Loan Delinquency Rate improved.

All six early warning signs are flashing red. Meanwhile, three of the imminent signals are healthy while three—Capacity Utilization, Housing Starts ÷ Jobless Claims, and Consumer Confidence ÷ The Unemployment Rate—are red. C&I Loan Delinquencies flipped from yellow to green this quarter.