Phoenix Lending Survey Results Reveals Coronavirus will be a Leading Driver of Economic Performance in 2020

From the first quarter Phoenix Management “Lending Climate in America” survey results, which was conducted in late February, reveal the coronavirus and other factors will be leading economic driver in 2020.

Lenders were asked to identify what they believe will be the largest driver of economic performance in the first half of 2020. The majority of lenders, 40%, believe the coronavirus along with other factors will be the largest driver of economic performance. Twenty-seven percent of lenders believe U.S.-China trade negotiations will be the largest driver, while 13% believe a) U.S. presidential race implications, and b) monetary policies will be the largest driver of economic performance. 

The outlook for the U.S. economy saw a slight increase for both the near and long-term. The near-term grade point average (GPA) increased 13 percentage points to 2.57 from the Q4 2019 results of 2.44. While the projected outlook for the U.S. economy in the long-term had been on a steady decline, forecasted performance improved slightly in Q1 2020. Lenders optimism of the U.S. economy in the long-term improved, increasing 14 percentage points to a 1.79 from the previous quarter’s results of 1.65.

Phoenix’s Q1 2020 “Lending Climate in America” survey asked lenders if they believe consumer behavior will be the key to a strong economy. Consumer spending has grown steadily even as business investments weakened and exports face heavy obstacles. New job opportunities are giving households a steady income, enabling an increased growth in spending that the majority of lenders believe will act as a foundation for continued economic performance. Garnering the highest percentage of responses (93%), were the lenders that agree consumer behavior will be the foundation for a strong economy. Of the lenders surveyed, 7% disagree and believe factors other than consumer behavior will be responsible for a strong economy.

Lenders were also surveyed this quarter on whether they believe the U.S.’s GDP will match 2019. The majority of lenders, 67% believe that the GDP will grow at the same annualized rate of 2.1% in 2020 as it did throughout 2019. Of the lenders surveyed, 20% of lenders believe the GDP will rise modestly and 2020 will end with a 0.3% – 0.5% increase. Thirteen percent of lenders believe the Q3 and Q4 in 2020 will underperform and GDP will sharply decline.

“Hard to believe that these results were tabulated less than a mere 5 weeks ago,” says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix. “How the world has changed.  It is interesting that 40% of the respondents believed the coronavirus would be the largest driver of economic performance.  You can say that again!  Ditto for 93% agreeing that consumer behavior drives the economy.  We have a very long road ahead us.  Working together, we will rebuild and continue to accomplish great things.”

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.®