From the third quarter Phoenix Management “Lending Climate in America” survey results reveal a weakened U.S. economy in the near and long term.

After a brief resurgence, lenders displayed a more adverse outlook and assessment of the U.S. economy for the near and long term. The GPA for the U.S. economy in the near term significantly decreased 56 percentage points to 2.23 from the Q2 2021 results of 2.79. Additionally, lenders optimism of the U.S. economy in the long term weakened, decreasing 13 percentage points to a 2.23 from the previous quarter’s results of 2.36.

August had the fewest number of new workers in the last seven months. When asked as we move forward into Q4’21 and 2022, do you expect the job market to slowly bounce back, 77 percent of lenders surveyed believe that even with the delta variant, the job market will likely bounce back as the holiday season approaches. Twenty-three percent of lenders believe the surge of the delta variant will lead to hiring freezes as a precaution for a potential shutdown.

Phoenix’s Q3 2021 “Lending Climate in America” survey asked lenders what factor they expect to be the most challenging for borrowers. Of the lenders surveyed, 62 percent of lenders expect supply chain management to be the most challenging factor, while 38 percent expect labor costs to be the most challenging factor for borrowers through the first quarter of 2022.

Lenders were also surveyed this quarter to determine how borrowers are currently combatting inflationary pressure. The vast majority of lenders, 77 percent, believe borrowers are currently combatting inflationary pressures by raising their prices and limiting discounts offered to customers. Fifteen percent of lenders believe borrowers are absorbing the margin compression on a temporary basis, while 8 percent believe borrowers are reducing operating expenses and/or eliminating waste to combat inflationary pressure.

“Confidence in the near-term U.S. economy weakened after a brief resurgence earlier this year,” said Michael Jacoby, Senior Managing Director and Shareholder of Phoenix. “While lenders seem to be uncertain about the U.S. economy in the near and long term, the majority of lenders surveyed believe that even with the delta variant, the job market will likely bounce back which is positive as we enter Q4/21 and the holiday season.”