Finance leaders preparing to borrow money, go public, execute either side of an M&A transaction or make a significant business investment soon are likely watching the U.S. presidential race closely. Both candidates have very different approaches and distinct visions of their economic plans’ ideal outcome.
In Deloitte’s latest CFO Signals survey from Q3 of this year, finance leaders shared their thoughts on where they think the federal government, regardless of who is in the Oval Office, should focus. More than half (58%) said they believe the outcome of the election will “extremely or very consequentially” impact their organizations.
Where CFOs stand on critical issues
Although the survey gives no details on political affiliation or CFOs’ desired candidate, it provides insight into the issues finance leaders believe are most important. Though the results are split, a third of CFOs chose workforce issues as the most important issue for the federal government to focus on. Surprisingly, AI regulation, something the most powerful technology leaders have called for exploration into, was at the bottom of the list.
Surveyors also noted concerns about outbound investment and the supply chain are lingering due to issues surrounding sourcing parts and components many businesses have faced either themselves or somewhere in their procurement processes.
Areas of concern that are most impactful to CFOs are mostly macro ones. Geopolitics (56%) and the economic environment (41%) were the top choices. Trade policy and tariffs (39%) and corporate and individual tax policy (37%) — areas where both candidates have campaigned for change — are also areas of focus for finance leaders.
When CFOs were asked about the most significant economic issues affecting business operations, 20% pointed to tariffs and 16% mentioned tax policy. Together, these factors (36%) overshadowed other concerns, including inflation (34%), interest rates (20%) and debt levels (11%).
Tax Cuts and Jobs Act impacts
The looming expiration of the Tax Cuts and Jobs Act (TCJA) will also impact CFOs if the Trump-era cuts do expire, which is set to happen at the end of 2025. Both the new President and Congress, regardless of who is in office, will have to address the expiring changes, which, if overhauled or altered significantly, could be highly influential to the performance of the economy.
Bonus depreciation, one of the provisions in the TJCA, remains a significant focus for CFOs, with half (50%) identifying it as a key concern. The current 60% deduction allows organizations to write off a large portion of new investments in the first year, but this benefit is slated to phase out over the next two years, eventually ceasing by 2027.
With this timeline in mind, companies are likely rethinking their capital expenditures to take full advantage of the tax breaks before they diminish, especially if the Harris administration takes control of the White House.
Poor economic outlook
Along with their uncertainty in the election and despite a newly dovish Fed, only 14% of finance chiefs rated the current U.S. economy as good. Just under a fifth (19%) said they see the North American economy it improving in a year. This is a sharp drop from previous quarters, which saw a majority of CFOs have a positive economic outlook in Q1 of 2024 and Q3 of 2023.
Surveyors note that CFOs are not showing confidence in the economy due to a variety of factors, but they believe it’s due to multiple metrics that indicate a recession is unavoidable.