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March 17, 2022
Philadelphia, PA (March 17, 2022) — From the first quarter Phoenix Management “Lending Climate in America” survey results reveals the majority of lenders anticipate geopolitical tension and an increase in interest rates to be the biggest economic headwind in 2022.
Phoenix’s Q1 2022 “Lending Climate in America” survey asked lenders what the biggest headwind will be for 2022. Fifty percent of the lenders surveyed believe geopolitical tension will be the biggest headwind, while the other 50% of lenders believe higher interest rates will be the biggest headwind for 2022. Zero percent of lenders cited higher corporate taxes or the Omicron COVID-19 variant to be an economic headwind for 2022. Responses were received prior to March 1st, 2022.
Certain industries have been greatly affected by labor shortages due to “remote opportunities” at competitive pay. When asked, whether industries like trucking should enact large pay increases to entice workers to rejoin that labor sector, all lenders (100%) believe that companies need to entice workers with higher pay and benefits to compete with remote opportunities.
Additionally, Phoenix’s “Lending Climate in America” survey asked lenders what’s the biggest driver of their customer’s compressing margins. Of the lenders surveyed, 43% of lenders stated higher raw material prices as the biggest driver for their customers’ compressing margins. Twenty-nine percent of lenders cited freight challenges as the biggest driver for their customers’ compressing margins, while twenty-eight percent cited labor shortages.
Phoenix’s “Lending Climate in America” survey routinely asks lenders to select which economic factors they believe will have strongest potential to affect the economy over the next six months. The vast majority of respondents (71%) believe unstable energy prices, while sixty-four percent of lenders believe the stability of the stock market will have the strongest effect on the U.S. economy in the near term.
Lastly, lenders optimism in the U.S. economy in both the near and long term significantly decreased as we begin 2022. The GPA for the U.S. economy in the near term decreased by 44 percentage points to 1.77 from the Q4 2021 results of 2.21. The GPA for the U.S. economy in the long term also decreased by 44 percentage points to 1.92 from the previous quarter’s results of 2.36.
“Geopolitical tension and higher interest rates appear to be the biggest economic concern for lenders,” says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix. “The situation in the Ukraine and the Feds announcement on March 16th to increase rates by 25 basis points certainly support these concerns. Additionally, the vast majority of lenders expect the U.S.’s current challenge with unstable energy prices to have a negative impact and will be the factor with the strongest potential to affect the near-term economy followed by the stability of the stock market.”
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 IB® provides seamless investment banking solutions including M&A advisory, complex restructurings and capital placements. Phoenix IB 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.phoenix-ib.com.
Tags: Economic Outlook, Lenders
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