Dive Brief:

• Most C-suite executives (71%) believe that post-election trade and tax policies will hurt U.S. competitiveness regardless of who wins the Nov. 5 presidential balloting, PwC said Wednesday, citing a survey.
• Roughly three out of four (76%) top executives expect the election will result in a divided government, and three out of five (61%) forecast recession in the next six months, compared with 49% in June, according to PwC. The consulting firm surveyed 709 CFOs, CEOs and other C-suite leaders Sept. 12-19.
• The risk of cyberattack persists as the top risk, flagged by 75% of the executives, with pressure on profit margins, the hazy economic outlook and geopolitical turmoil close behind, PwC said. “Executives are contending with an increasingly complex and volatile business landscape, further complicated by the upcoming election,” PwC U.S. Advisory Leader Tyson Cornell said in a statement.

Dive Insight:

The hard-to-predict outcome from the presidential election has compelled CFOs and other leaders at companies of all sizes and industries to scale back expectations and forgo investment, according to recent surveys. 

“Uncertainty is at a historically high level,” the National Federation of Independent Business said Tuesday. U.S. small businesses have more trouble predicting the business climate in the next six months than any time since the federation began measuring their outlook 38 years ago.

“The election will trigger adjustments to plans once the results are known,” the NFIB said in a report on a monthly survey. “In a few weeks, the picture will become much more certain for Main Street firms.”

Larger companies also see a hazy future. Roughly one out of three CFOs have postponed, trimmed or canceled investment plans because of difficulty gauging the impact from the election on regulation, taxation and other policy, the Federal Reserve Banks of Richmond and Atlanta said on Sept. 25, citing a quarterly survey.

Although their optimism in the economy slumped compared with the second quarter survey, CFOs see inflation cooling and predict that revenue and employment grew during Q3, the two regional Fed banks said, referring to a survey conducted with Duke University’s Fuqua School of Business.

CFOs shy away from risk taking more than at any time since 2009, wary of inflation, the economic outlook, conflict abroad and the potential election results, Deloitte found in a quarterly survey released late last month.

The cloudy political outlook has slowed demand and hiring, along with investment and business sentiment, S&P Global Market Intelligence said recently. Economic growth will probably decline next year to 1.8% from 2.7% in 2024, S&P Global Ratings said, predicting that costs of capital and near-term “policy uncertainty,” will inhibit capital expenditure and hiring.

Three out of four top executives believe that a 10% universal tariff on imports as proposed by former President Donald Trump would significantly hurt their companies’ growth, PwC said.

The same proportion of survey respondents said they would significantly cut U.S. based investments if a 28% corporate tax rate favored by Vice President Kamala Harris were to take effect, PwC. said.

“Executives see higher taxes and climate as policy risks under Harris, trade and foreign relations as policy risks under Trump,” PwC said.

Regardless of who wins the White House, 77% of top executives expect an increase in executive orders and 75% anticipate more regulation and litigation, according to PwC.

“Executives see economic, political and regulatory risks no matter who wins the 2024 U.S. presidential election,” PwC said. “Uncertainty, volatility, complexity and risk — it’s a tough time to lead companies now.”