From the first quarter Phoenix Management “Lending Climate in America” Survey, results show volatility and uncertainty for the U.S. economy with deteriorating confidence in the near term.

After a 37-percentage point GPA drop between Q3 2018 and Q4 2018, Lenders’ confidence on how they expect the U.S. economy to perform during the next six months continued to decrease in Q1 2019. The GPA for the U.S. economy in the near term decreased 19 percentage points to 2.52 from the Q4 2018 results of 2.71. However, the GPA for the U.S. economy beyond the next six months saw a significant increase of 30 percentage points to 2.30 from the previous quarter’s results of 2.00.

Furthermore, lenders were surveyed on their expectations for GDP growth in 2019. In 2018, U.S. GDP growth was nearly 3 percent, and the consensus of economic forecasts are for U.S. GDP growth of 2.3 percent in 2019. Of the lenders surveyed, 59 percent, agree with the forecasted, decreased GDP rate. On the contrary, 26 percent of lenders surveyed expect it will be greater, and 15 percent expect GDP growth to be lower than the forecasted in 2019.

Phoenix’s Q1 2019 “Lending Climate in America” survey, asked lenders if they believe shaky outlooks abroad, and a long-lasting U.S. government shutdown will inhibit U.S. economic growth in 2019. The majority of lenders, 56 percent, believe that shaky outlooks abroad and domestically are concerning, and 2019 will be a year of economic volatility and uncertainty. Thirty-three percent of lenders believe the U.S. economy is still poised to grow and add jobs in 2019, while 11 percent believe shaky outlooks and government policy uncertainty will noticeably inhibit U.S. economic growth in 2019.

In addition, lenders were surveyed regarding the top three industries they expect to experience the greatest volatility over the next six months. Eighty-two percent of respondents believe that retail trade will experience the greatest volatility, while 33 percent of lenders surveyed believe construction will experience the greatest volatility over the next six months. Of the lenders surveyed, 26 percent expect manufacturing to experience the greatest volatility.

Lenders were also surveyed this quarter on how they expect the retail industry to react during the remainder of 2019. Nearly all lenders agreed that the brick-and-mortar retail industry would shift in 2019. The majority of lenders, 52 percent, expect an increase in bankruptcy for brick-and-mortar retailers due to the rise of e-commerce and evolving customer sentiment, while 44 percent expect fewer bankruptcies, but a reduction in footprint to invest in product, experience, and branding.

“The results from the Q1 2019 survey indicate lenders are still pessimistic about the U.S. economy in the near term. This deteriorating confidence was further supported by a forecasted, decreased GDP rate, along with high expectations for 2019 to be year of economic volatility and uncertainty in the United States,” said Michael Jacoby, Senior Managing Director and Shareholder of Phoenix.

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