US businesses delay investments due to election uncertainty

Some 30% of firms have postponed, scaled down or canceled investment plans because of uncertainty around the election, up from 28% last quarter, according to the latest CFO Survey of financial professionals published Wednesday by the Federal Reserve Banks of Atlanta and Richmond and Duke University’s Fuqua School of Business. 

“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 blog post. 

The share of companies taking more than one step to hunker down ahead of the election also rose to 11% from 6% in the second quarter, the survey that closed Sept. 6 found. 

Firms that expect to reduce investment also are bracing for lower revenue and employment growth this year compared to their peers, the survey showed. While they see revenue and employment returning to levels on par with non-impacted firms in 2025, they do not expect to catch up to them. Instead, they expect to “permanently lose” 1 to 2 percentage points of growth this year, the report showed. 

The findings match anecdotal evidence suggesting the election is keeping many firms in limbo. The vote is being mentioned in corporate earnings calls “earlier and more abruptly” than it has been in previous elections, according to an analysis by Goldman Sachs. 

Executives in almost one in five earnings calls mentioned “election” 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.