A rising variety of US companies are holding off on main investments till they know the end result of the upcoming presidential election.
Some 30% of companies have postponed, scaled down or canceled funding plans due to uncertainty across the election, up from 28% final quarter, in response to the newest CFO Survey of monetary professionals printed Wednesday by the Federal Reserve Banks of Atlanta and Richmond and Duke College’s Fuqua College of Enterprise.
“Relative to their non-impacted peers, impacted firms are less optimistic, are less likely to invest in expanding or maintaining capacity but more likely to invest in cost reduction, and expect slower revenue and employment growth in 2024,” Atlanta Fed researchers Brent Meyer and Daniel Weitz wrote in a weblog put up.
The share of corporations taking multiple step to hunker down forward of the election additionally rose to 11% from 6% within the second quarter, the survey that closed Sept. 6 discovered.
Corporations that count on to scale back funding are also bracing for decrease income and employment development this yr in comparison with their friends, the survey confirmed. Whereas they see income and employment returning to ranges on par with non-impacted companies in 2025, they don’t count on to catch as much as them. As an alternative, they count on to “permanently lose” 1 to 2 proportion factors of development this yr, the report confirmed.
The findings match anecdotal proof suggesting the election is protecting many companies in limbo. The vote is being talked about in company earnings calls “earlier and more abruptly” than it has been in earlier elections, in response to an evaluation by Goldman Sachs.
Executives in virtually one in 5 earnings calls talked about “election” within the second quarter, the Wall Road financial institution discovered. That’s up greater than 5 proportion factors from the identical durations in 2020 and 2016, in response to Goldman.
