From the third quarter Phoenix Management “Lending Climate in America” Survey, results shows a marked shift in lenders outlook on the U.S. economy in both the near and long term.

The Q3 2017 survey results reversed the recent trend of expectations for the near term GPA to be higher than the long term GPA. Lenders optimism on how they expect the U.S. economy to perform beyond the next 6 months increased 22 points from a 2.30 in the previous quarter to 2.52. On the contrary, their expectation on how they expect the U.S. economy to perform in the near term continued to decrease, falling 7 points to a 2.43 in Q3 2017 from the Q2 2017 GPA of 2.50.

Furthermore, lenders were surveyed on what they believe will be the outcome on the near term economy if President Trump were to cut taxes and increase infrastructure spending. Contrary to their increasing pessimistic view on the near term economy, 52% of lenders believe that there would be a positive outcome – additional spending, financed cheaply given the current interest rate environment, if taxes were cut and infrastructure spending increased.

In addition, lenders were also surveyed regarding the economic factors they believe will have the strongest potential to affect the near-term economy. Fifty-five percent of respondents believe unstable energy prices will have the strongest impact on the economy in the next six months, while forty-five percent of lenders surveyed believe that the stability of the stock market will have the strongest potential to affect the U.S. economy in the near-term.

The sentiment for unstable energy prices is further supported by the fact that many lenders (66%) believe that we will immediately see the biggest effect on domestic gasoline prices due to major shutdowns experienced during hurricanes Harvey and Irma. Of the lenders surveyed, 17% believe that we will see the biggest effect on domestic gasoline prices in a) Q3 2017, and b) Q4 2017 from hurricanes Harvey and Irma.

“Lenders are anticipating dramatic reductions in loan losses and bankruptcy filings during the next 6 months. Lenders confidence on the health of the U.S. economy in the near term continues to decrease slightly but remains relatively stable. However, we have seen a significant increase in their confidence in the U.S. economy in the longer term which is a positive indication for 2018”, says Michael Jacoby, Senior Managing Director and Shareholder of Phoenix.

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