The Q4/19 Phoenix Management “Lending Climate in America” survey results reveal lenders expect a downturn in the U.S. economy in the long-term. 

The outlook for the U.S. economy in the long-term continued downward from last quarter as lenders continue to indicate a pessimistic view about the U.S. economy. The long-term grade point average (GPA) decreased 39 percentage points to 1.65 from the Q3/19 results of 2.04 which represents the lowest grade point average since the 1.06 GPA in Q4/08. To the contrary, lenders optimism of the U.S. economy in the near-term slightly improved, increasing 6 percentage points to a 2.44 from the previous quarter’s results of 2.38.

Furthermore, lenders were surveyed on the two factors they believe will have the strongest potential to affect the U.S. economy over the next six months. The majority of lenders (50%), believe the stability of the stock market will have the greatest potential to affect the near-term economy. Of the lenders surveyed, 44% believe constrained liquidity in capital markets will have the strongest potential, and 39% believe the sluggish housing market will have the strongest potential to affect the near-term economy.

Phoenix’s Q4/19 “Lending Climate in America” survey asked how much longer lenders believe growth will continue for builders who are being encouraged by one of the most attractive periods for house-hunters in many years. Garnering the highest percentage of responses (63%), were the lenders that believe despite the housing rebound, growth will halt in 2020, and 37% of lenders surveyed believe growth will continue through 2021.

Lenders were also surveyed this quarter on the top three industries they expect will experience the most volatility over the next six months. Garnering the highest percentage of responses (83%), were the lenders that expect retail trade to experience the greatest volatility, while 39% of lenders selected healthcare and social assistance, and 28% expect the construction industry along with agriculture, forestry, fishing, and hunting will experience the most volatility.

“The results from our Q4/19 survey indicate lenders are becoming more pessimistic about the U.S. economy in the long-term as the GPA has reached its lowest since Q4/08. This is further supported by the projections of a slowdown in the housing market in 2020,” said Michael Jacoby, senior managing director and shareholder of Phoenix.