Global consulting firm J.S. Held, proudly celebrating 50 transformative years, reveals the “Lending Climate in America” survey results from Phoenix Management, a part of J.S. Held. The third quarter survey results highlight concern about the uncertainty of the upcoming presidential election and the economic/policy changes that would accompany it.

Phoenix’s Q3 2024 “Lending Climate in America” survey asked lenders which factors could have the strongest potential to impact the economy in the upcoming six months. Seventy-one percent of lenders are most concerned about the outcome of the 2024 election, while 30% of lenders believe both the interest rate risk and the stability of the stock market have the strongest potential to impact the economy. Lenders also expressed significant concern regarding the possibility of a US Recession. To see the full results of Phoenix’s “Lending Climate in America” survey, please visit https://www.phoenixmanagement.com/lending-survey/.

Lenders revealed what actions their customers may take in the next six to twelve months. Almost three-quarters of the surveyed lenders believe their customers will raise additional capital, most likely buoyed by an anticipated decrease in interest rates. Hiring new employees and making new capital investments follow closely with around a third of lenders anticipating those plans by their customers.

Sixty percent of respondents identified the retail trade industry as the most likely to experience volatility in the next six months, followed by the real estate and financial services industries at 36% of respondents.

Additionally, Phoenix’s “Lending Climate in America” survey asked lenders in what direction they thought the Fed would move interest rates and by how much in the coming six months.  On September 18, 2024, the Federal Reserve decreased interest rates by ½ a point, or 50 basis points.  Notable among the survey results from the August survey, seventy-one percent of the respondents think interest rates will decline by a half a point or more.

Lender optimism in the US economy decreased substantially in the near term from 2.00 in Q2 2024 to 1.76. In this current quarter, there is a peaking expectation of a B-level performance (65%), with the remainder skewed toward poorer performance. More telling, lender expectations for the US economy’s performance in the longer term increased significantly from 1.83 to 2.47. Of the lenders surveyed, 53% believe the US economy will perform at a “B” level during the next twelve months, an increase from none in the prior quarter.

"Lenders are concerned about the upcoming Presidential election yet expressed significantly more optimism about the US economy beyond the next six months than they did for the next six months.  These conflicting views are difficult to reconcile,” says Michael Jacoby, Senior Managing Director of Phoenix Management, a part of J.S. Held.  “There is consistency, however, in the outlook for interest rates, as evidenced by 71% of the respondents opining that interest rates will decline by 50 basis points or more in the next six months, versus none in the last survey.  Lenders clearly believe that the day of reckoning where the fed begins reducing rates is upon us, and a similar percentage believe their customers will raise additional capital in the next six to twelve months, most likely a result of these expected interest rate reductions.”