Phoenix’s “Lending Climate in America” Survey: Lenders Reveal COVID-19 Impact on the U.S. Economy

June 8, 2020  |  By Dianne Lomonaco  |  2 Minute Read

For almost 25 years, Phoenix Management Services has been collecting, tabulating, and analyzing the results from its “Lending Climate in America” survey to evaluate national lending attitudes and trends. Each quarter Phoenix’s proprietary “Lending Climate in America” survey is distributed to over 5,000 lenders nationwide. The survey poses routine questions to lenders quarterly as well as three new questions to lenders to obtain feedback on current economic hardships.

The three new questions posed to lenders in Q2/20 focused on the COVID-19 pandemic and the opinions from lenders on various topics including unemployment rate, post-crisis operation levels, and the trillion dollars spent on a stimulus package to buffer the economic impact brought on by COVID-19.

Lenders were asked the following questions:

1. Of the borrowers that will receive Federal Stimulus funds as a result of the COVID-19 crisis, what percent do you believe will return to or exceed pre-crisis operation levels by Q1 2021?
   
   As the COVID-19 crisis continues to impact business performance, the majority of lenders believe that less than half of all borrowers that received Federal Stimulus funds will return to or exceed pre-crisis operation by Q1 2021. Forty percent of lenders believe 41-60% of borrowers will return to or exceed pre-crisis operation levels by Q1 2021. Garnering the second highest percent of responses were the thirty-three percent of lenders that believe 20-40% of borrowers will return to or exceed pre-crisis operation levels, while 17% believe less than 20% of borrowers will return to or exceed pre-crisis operation levels by Q1 2021. Ten percent of respondents believe 61-80% of borrowers will return to or exceed pre-crisis operation levels by Q1 2021.
2. As of April 16, 2020, more than 22 million Americans had filed for unemployment aid in just 4 weeks – a staggering number that has wiped out a decade of employment gains and equates to a real unemployment rate of nearly 18%, with potentially more jobless claims to come. What do you think the unemployment rate will be at 12/31/20?
   
   When asked what the unemployment rate will be at by 12/31/2020, the majority of lenders, 50%, believe the unemployment rate to be at 10.01-15.0%. Twenty-eight percent of lenders believe that unemployment rate will be at 5.01-10.0%, while eighteen percent believe the unemployment rate will be at 15.01-20.0% by 12/31/20. Two percent of lenders think the unemployment rate will be at a) less than 5%, and b) 20.01% or more at 12/31/20.
   
   Furthermore, one of the routine questions to survey respondents is whether they expect economic indicators to be up, down, or remain at the same level over the next 6 months. The question drills down even further into specific economic indicators including unemployment. Our survey utilizes the Diffusion Index to measure lender sentiment. The Diffusion Index is calculated by subtracting the percentage of negative expectations from the percentage of positive expectations. Of the lenders surveyed in Q2/20, 26% expect an increase in unemployment, which represents a 19-percentage point increase from the Q1/20 results of 7%.
3. The federal government has provided trillions of dollars of stimulus to buffer the economic impact brought on by COVID-19. How effective do you think these measures have been?
   
   To offer relief due to the economic impact of the COVID-19 pandemic, the federal government has provided trillions of dollars of stimulus to buffer the economy. Ninety-one percent of lenders believe the federal stimulus efforts have been effective or slightly effective. The majority of survey respondents, 53%, think the trillion dollars provided by the federal government to buffer the economic impact brought on by COVID-19 has been slightly effective. Of the lenders that were surveyed, 38% think the measures have been effective, and 7% of lenders think the trillion dollars provided by the federal government to buffer the economic impact brought on by COVID-19 has been very effective. Only two percent of lenders think the measures have not been effective at all.

At Phoenix, our professionals have the expertise and skills to assist businesses that have been impacted by the COVID-19 pandemic. Meet our team to learn more about how our professional’s extensive experience can make a difference today.

The Phoenix Management “Lending Climate in America” Survey is conducted quarterly. To see the full survey results for Q2 2020, view the infographic and sign up to participate in future surveys, please visit http://www.phoenixmanagement.com/about-phoenix/lending-survey.

Business Volatility COVID-19 Lending Stimulus Unemployment Rate