US businesses delay investment due to election uncertainty

About 30 percent of firms have delayed, scaled back or canceled investment plans due to uncertainty surrounding the election, up from 28 percent last quarter, according to the latest CFO survey of finance professionals, released Wednesday by the Federal Reserve Bank of Atlanta and Richmond and Duke. The University’s Fuqua School of Business.

“Relative to their unaffected peers, affected firms are less optimistic, less likely to invest in capacity expansion or maintenance, but more likely to invest in cost reductions, and expect slower growth in revenue and employment job in 2024,” Atlanta Fed researchers Brent Meyer. and Daniel Weitz wrote in a blog post.

The share of companies that took more than one step to accommodate ahead of the election also rose to 11 percent from 6 percent in the second quarter, the survey ended Sept. 6 found.

Firms that expect to cut back on investment are also bracing for lower revenue and employment growth this year compared to their peers, the survey found. While they see revenue and employment returning to levels equal to those of unaffected firms in 2025, they do not expect to catch up. Instead, it is expected to “definitely lose” 1 to 2 percentage points of growth this year, the report said.

The findings fit with anecdotal evidence suggesting that the election keeps many firms in limbo. The vote is being mentioned in corporate earnings calls “earlier and more sharply” than it has been in previous elections, according to a Goldman Sachs analysis.

Executives in nearly one in five earnings calls mentioned “elections” in the second quarter, the Wall Street bank found. That’s up more than 5 percentage points from the same periods in 2020 and 2016, according to Goldman.