The first quarter Phoenix Management “Lending Climate in America” survey results reveal the third stimulus package will cause inflationary pressure in the U.S. economy.

The third stimulus package includes nearly $2 trillion in coronavirus relief funds and puts money in the hands of millions of Americans. When asked whether the United States should prepare for inflationary pressures going forward, 77% of lenders agree that these historic economic stimulus packages will cause inflationary pressure in the U.S. economy. Twenty-three percent of lenders disagree and believe the economy will be able to sustain the infusion of money and inflation will be subdued.

While the majority of lenders surveyed seem to believe the third stimulus package will cause inflationary pressure going forward, the outlook for the U.S. economy in the near-term steadily improves. The near-term grade point average (GPA) increased by 24 percentage points to 2.29 from the Q4 2020 GPA of 2.05. Although lender confidence in the economy increased in the near-term, likely spurred by positive news related to vaccine rollout, the downward trend in long-term confidence seen in Q4 2020 persisted with a 14 point drop to a 2.29 GPA in Q1 2021.

Phoenix’s Q1 2021 “Lending Climate in America” survey asked lenders whether they believe COVID-19 restrictions will come to an end within a year and allow for a normal economic environment. Even with the rollout of multiple COVID-19 vaccines, the majority of lenders, 51%, believe that there will still be restrictions, like social distancing and masks, required in the future. Forty-nine percent of lenders believe the success of vaccine administration will allow for the United States to end all coronavirus related restrictions within the coming year.

Lenders were also surveyed this quarter to identify their biggest concern for the first half of 2021. The vast majority of lenders, 69%, reported their biggest concern for the first half of 2021 is vaccine distribution and mutation of the virus. Twenty-six percent of lenders reported softer economic growth, while 5% reported the dollar strengthening as their biggest concern for 1H 2021.  

“The COVID-19 pandemic continues to be top of mind for lenders,” says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix. “Lenders seem to be optimistic about the near-term U.S. economy as vaccines are distributed, however their longer-term confidence continues to deteriorate.”

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