Phoenix Lending Survey Results Reveals COVID-19 Will Continue to Have a Major Effect on U.S. Performance Throughout 2020

From the third quarter Phoenix Management “Lending Climate in America” survey results reveal COVID-19 will continue to have a major effect on U.S. performance throughout 2020.

While lenders seem to believe COVID-19 will have a major effect on the U.S. performance until a vaccine is widely available, the outlook for the U.S. economy in the near and long-term is more favorable in Q3 2020 than in the previous quarter predictions. The near-term grade point average (GPA) increased 54 percentage points to 1.72 from the Q2 2020 GPA of 1.18. The projected outlook for the U.S. economy in the long-term increased slightly (by 36 percentage points) to 2.60 from the previous quarter’s results of 2.24.

Millions of workers were furloughed between March and June of 2020, and 22% were permanently laid off. When asked, prior to the widespread availability of a vaccine, do you believe we will see companies continue to operate at post-COVID or pre-COVID headcounts, 64% of lenders believe companies will continue to operate at post-COVID 19 headcount levels until a vaccine is widely available. Thirty-six percent of lenders believe companies will continue migrating towards pre-COVID headcount levels.

Phoenix’s Q3 2020 “Lending Climate in America” survey asked lenders how they expect their loan portfolio to perform in Q4 versus Q3, assuming the status quo regarding the COVID-19 pandemic (i.e. no major increases in cases or death from Q3 and no vaccine) from a risk rating perspective. The majority of lenders, 44%, expect their loan portfolios to remain stable. Thirty-two percent of lenders expect their loan portfolios to decline, while 24% expect their loan portfolios to improve from a risk rating perspective.

Lenders were also surveyed this quarter to identify what they believe will be the driving factor for the U.S. presidential election results. The majority of lenders, 48%, believe the coronavirus will be the most important 2020 election issue. Forty-four percent of lenders fiscal policy will be the most important issue in the 2020 presidential election, while 4% believe a) economic inequality, and b) supreme court appointments will be the driving factors for the election results. 

“In Q3/20, 64% of the respondents believe companies will continue to operate at post-COVID headcount levels until a vaccine is widely available. There was a significant drop in the diffusion index for unemployment (-36%) this quarter from Q2 20’s results of 26%. For many Americans furloughed and laid off, a vaccine cannot come soon enough,” says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix. “It is not surprising that the coronavirus will be the largest factor in the U.S. economic performance moving forward as well as the U.S. presidential election in November.”

To see the full results of Phoenix’s “Lending Climate in America” Survey, please visit http://www.phoenixmanagement.com/survey/

About Phoenix:

For 35 years, Phoenix has provided smarter, operationally focused solutions for middle market companies in transition. Phoenix Management Services® provides turnaround, crisis and interim management, specialized advisory for both distressed and growth-oriented companies. Phoenix Transaction Advisory Services® provides quality of earnings, operational diligence, Quality of Enterprise®, management/organizational reviews, business integration, sell-side business preparation and other transaction related support. Phoenix Capital Resources® provides seamless investment banking solutions including M&A advisory, complex restructurings and capital placements. Phoenix Capital Resources is a U.S. registered broker-dealer and member of FINRA and SIPC. Proven. Results.®

If you would like to learn more about Phoenix, please visit http://www.phoenixmanagement.com or http://www.phoenixcapitalresources.com.