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Phoenix Lending Survey Reveals Optimism in the U.S. Economy

May 21, 2021, 07:05 AM
Filed Under: Economy

The second-quarter Phoenix Management “Lending Climate in America” survey results reveal optimism in the U.S. economy with results for the near-term economy exceeding pre-pandemic predictions for the first time since the country shutdown due to COVID.

Since reaching an 11-year record low in Q2 2020, confidence in the near-term economy (next six months) has steadily climbed quarter over quarter to a 2.79 weighted average GPA in Q2 2021. Additionally, lender confidence in the U.S. economy in the long-term increased (by 7 percentage points) to 2.36 from the previous quarter’s results of 2.29.

Real GDP decreased 3.5 percent in 2020. When asked given the current state of vaccine rollouts, pandemic-related restrictions (and their potential easing), and stimulus plans, what level of GDP growth is expected for 2021, 58 percent of lenders surveyed predict a 4-5 percent growth in 2021. Twenty-one percent of lenders expect less than 2 percent, while 14 percent predict 6-7 percent growth. Seven percent of lenders surveyed predict a 2-3 percent GDP growth in 2021.

Phoenix’s Q2 2021 “Lending Climate in America” survey asked lenders what macroeconomic headwind they believe could derail economic recovery. The majority of lenders, 50 percent, believe that policy risk (such as interest rates or withdrawal of stimulus) is most likely to be the macroeconomic headwind that could derail economic recovery. Twenty-one percent of lenders believe that either a) international supply chain issues, or b) vaccine distribution or virus mutation is most likely to be the macroeconomic headwind that could derail economic recovery. Of the lenders surveyed, 8 percent of lenders say consumer caution as the U.S. reopens will most likely be the macroeconomic headwind that could derail economic recovery.

Lenders were also surveyed this quarter to determine whether they believe the U.S. will return to pre-COVID employment rates by the end of 2021. The vast majority of lenders, 71 percent, believe many Americans will remain disincentivized from entering the labor force due to the current COVID unemployment benefits. Twenty-nine percent of lenders say that with the roll-out of vaccines, the U.S. will reach similar pre-COVID unemployment rates by the end of 2021.  

“Confidence in the near-term U.S. economy continues to improve as results exceed pre-pandemic predictions,” said Michael Jacoby, Senior Managing Director and Shareholder of Phoenix. “While lenders seem to be confident about the U.S. economy, the factor deemed most likely to derail the U.S. economy is policy risk and the majority of lenders are concerned about how current COVID unemployment benefits could disincentivize Americans from entering the labor force.”

To see the full results of Phoenix’s “Lending Climate in America” Survey, visit here.

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