According to Phoenix Management Lending Climate in America survey,supply chain disruptions and continued inflation are the biggest concerns for consumers and the U.S. economy.
Phoenix’s Q2/22 Lending Climate in America survey asked lenders to identify the greatest risk to the U.S. economy. 56% of the lenders surveyed believe supply chain disruptions will be the greatest risk to the U.S. economy. Of the lenders surveyed, 22% believe federal reserve policy will be the greatest risk, while 17% believe rising interest rates will be the greatest risk to the U.S. economy. 5% of lenders stated that tight labor markets will be the greatest risk.
The impact of continued skyrocketing inflation is causing businesses to pass on the rising costs to the consumers. When asked whether we will start to see inflation level-off in the next few months, 72% of lenders expect inflation to continue rising, which will cause further economic stress in the U.S. by forcing consumers to decide which goods and services are no longer worth buying. 28% of lenders think we will start to see inflation level off in the next few months.
Additionally, Phoenix’s Lending Climate in America survey asked lenders to identify how their customers are responding to supply chain challenges. Of the lenders surveyed, 44% indicated their customers are responding to supply chain challenges through strategic stockpiling. 28% of lenders cited their customers are responding to supply chain challenges by adding suppliers from new geographies or paying more to ensure timely delivery.
Lender optimism in the U.S. economy in the short term decreased 10 points this quarter from 1.77 in Q1/22 to 1.67 in Q2/22. The majority of lenders (39%) believe the economy will perform at a “C” or “D” level during the next six months and lenders who believe the economy will perform at a “D” over the next 12 months increased from 15% to 28%. However, lender expectations for the U.S. economy’s performance in the longer term increased from the prior quarter from 1.92 to 2.11.
“Lenders optimism for the U.S. economy in the near-term continues to decrease” Michael Jacoby, senior managing director and shareholder of Phoenix, said. “The majority of lenders believe that supply chain disruptions will be the greatest risk the economy and that their customers are planning to begin strategic stockpiling as a way to combat these challenges.”
