Equipment Rentals and the US Economy
One of the interesting things about working in our sector is that people look to our numbers to indicate the direction of the economy. If “equipment rentals are up,” that’s usually taken as a positive sign. This is because so many people look to housing starts as an economic indicator. If there are more housing starts, more people will rent (or buy) equipment, and at least in our industry, that means more profit for us and for our clients.
But is that really true? In the short term, yes. But when you are talking about such big economic trends you have to speak in generalities. We might get a better sense of the real picture from the other side of the looking glass. Let’s, for example, think about how it might work for us here in Monticello, NY. If we use housing starts to measure economic growth, what do we do with our excess housing inventory? If there are more houses for sale that people simply don’t want to buy because they’d rather build their own (maybe it’s cheaper, maybe they want to customize, maybe they want to be closer to a new park and school instead of an older, more historic neighborhood) ultimately the small local economy is going to have to deal with that excess inventory. Two things can happen here. Either the market can have an adjustment to a lower price because of the excess inventory, or the neighborhoods in which there are a lot of homes for sale will begin to lose momentum (growth) and character (the “moss” that grows around a community).
In our industry, either of those scenarios still present opportunities for our sector. For those who are dealing with flatlining home equity or don’t want the market rates to dictate the valuation of their house, there’s always room for improvement. A new wing of the house, a new room, a new pool, a new garden – these are all things you can do with the help of new equipment. If it turns out that flight to suburbs changes old neighborhoods or virtually obliterates them through evacuation, then there’s the possibility of redevelopment, which will still need equipment for demolition, leveling, excavation, and rebuilding.
In this little story we can see that if you use the simple metric of “equipment rentals up” = “economy on the rise” you might not have all the facts. Sure, our industry and the homebuilding sector will do well, and anytime there is good economic news the consumer/taxpayer at large “feels” more comfortable (whatever that means) and makes purchases and investments and improvements based on that comfort and confidence. But we think it’s always important to take those big, national narratives and translate them to our local municipalities. We will only know how well we are doing by measuring how well the place we live is doing. We often forget in the national thrum of news that 80% of most of our lives are lived under state and local laws, and so too, whatever big national trends are going up or down, there’s always an opportunity to reinforce or fight back those trends, depending on which side of the trend you are on (or want to be on).
So I asked you to look at the big national story through our local perspective. I’ll be fair and go the other way with you.
If we say “equipment rentals are up” we are also talking about the new mega-trend of rentals. Do you think of Netflix as part of that trend? The trend that made you realize you can get mostly any movie you want within 2-3 days (sometimes immediately via streaming) so you don’t have to buy/maintain a library? Or what about the new disruptor AirBnB, which allows people to turn that extra space in their home into cash by renting to people who like the idea of staying in a home instead of a hotel? Even within the classic car-rental sector there has been a new niche developed: car-sharing a la ZipCar. Each of these innovations continues to teach the population that ownership is still king, but that we can leverage that ownership to help everyone be smarter about how they spend their money and time. And that’s an exciting thing to be part of. And hopefully, something that you’ll think about when you hear “rentals are up” next time.