From the first quarter Phoenix Management “Lending Climate in America” Survey, results continue to show a positive outlook on the U.S. economy in both the near and long term.
Lenders optimism on the U.S. economy for the near term increased this quarter from an overall ‘C’ grade to a ‘B’ grade in Q1 2017. Lenders expectations on how they believe the U.S. economy will perform during the next 6 months significantly increased 39 points from a 2.19 in Q4 to 2.58, which represents the highest GPA since Q2 2006. Interestingly, the GPA for the U.S. economy beyond the next 6 months decreased slightly to 2.45 from the previous quarter’s results of 2.50, but still represents an overall ‘B’ grade. This continued confidence is further supported by the continued improvement in indices that measure commercial lending sentiment, loan losses, bankruptcies and unemployment.
Lenders were also surveyed regarding the economic factor they think is most important in determining the health of the U.S. economy. The majority of lenders (65%) agree that an increase in private sector job growth is the most important factor, while 24% of lenders surveyed believe that reduced federal debt is the most important factor in determining the health of the U.S. economy.
In addition, Lenders have also shown a marked shift in the factors they believe will have the strongest potential to affect the near term economy. The stability of the stock market tops the list this quarter with 58% of lenders favoring this factor (up from 45% in Q4). However, 42% of lenders believe that unstable energy prices (16 percentage point decrease from Q4) and, 39% of lenders believe the U.S. Budget Deficit (6 percentage point increase from Q4) will have the strongest potential to affect the U.S. economy in the near-term.
With the hopes of domesticating previously outsourced production and manufacturing workforces, Lenders were also asked what they think will benefit the most if the Trump Administration is successful in renegotiating many of the U.S.’ international trade treaties. A total of fifty-four percent of the lenders surveyed think that new U.S.-based job creation will be the most beneficial if the Trump Administration is successful as renegotiating the United States international trade treaties.
“This quarter’s results showed short term GPA grade at a level 'B', the highest mark since Q2 2006. This increasing confidence in the short term was further supported by the meaningful increase in lenders’ expectations for increased lending, and of their customers’ plans to invest capital and make acquisitions, all of which should bode well for the continued growth and health of the U.S. economy overall,” says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix.
Read the full survey here