Rental Industry Struggling, But Still On Solid Footing

By Jeff Griffin, Senior Editor | July 2010 Vol. 65 No. 7

“From a timing perspective, a return to gross domestic product (GDP) growth at the end of 2009 would suggest an improvement in employment in mid-2010 and a recovery in construction spending in early 2011. Analysts also look to 2011 for real improvement based upon financial markets. Home foreclosures remain very high and bank credit standards are still tightening modestly, although moving toward neutrality. While housing is improving, it will be some months before housing starts take off in a big way. The key is employment — no one wants to make a major financial investment when they are unsure of their job. Once employment grows again, housing will take off. When it does, home prices will begin to increase once again, helping households to rebuild wealth. With consumer and business confidence badly shaken in this recession, the confluence of events in employment, finance, housing and construction is going to take time to improve, but is expected to happen in 2011.

“Things are improving now. It’s just hard to see it in our industry. Business capital spending is increasing already and doing so at strong rates. The issue is that it is happening in computers and other productivity-increasing technology, not in building materials, equipment and structures, which are more important to the equipment rental industry.”

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