Good morning. Not only are CFOs concerned about the results of the U.S. presidential election in November, they’re not upbeat about the economy, nor are they willing to take on more risks.
Deloitte released its Q3 2024 CFO Signals report on Wednesday and just 12% of CFOs believe now is a good time to take on greater risk, down from 26% in Q2 2024, and below the two-year average of 32%. Meanwhile, 14% of CFOs rate the current North American economy as good; 19% think it will be better in a year.
More than half (58%) of finance chiefs said the result of the U.S. presidential election will be extremely or very consequential for their company. I asked Steve Gallucci, U.S. and global leader of Deloitte's CFO Program, if this level of concern regarding the presidential election is typical, or if the 2024 election is causing more concern.
“After the 2016 election, we asked CFOs what was the most important change their organizations would make as a result of the new administration and Congress coming in,” Gallucci said. Sixty-two percent said they were making no changes. This would seem to indicate finance chiefs didn’t expect the results of the election to have a substantial impact on their organizations, he said.
However, in the Q3 2024 survey, 84% of CFOs said the election results will be extremely, very, or somewhat consequential to their organizations, Gallucci explained. And it may be even more telling that 67% of respondents describe the cumulative effect of federal regulation over the past three years as extremely or very impactful on their businesses, he said. If you include the amount of CFOs who said it would be “somewhat impactful,” the total percentage increases to 90%, he said. “This could explain, at least in part, CFOs’ current level of concern,” Gallucci added.
The areas CFOs are closely monitoring for potential impact to their companies: geopolitics (56%), the economic environment (41%), trade policy and tariffs (39%), and changes to corporate and individual tax policy (37%). Finance chiefs are evaluating various scenarios and most likely developing options and strategies to respond to any changes in trade policy or corporate taxes, Gallucci said.
The findings are based on a survey of 200 CFOs conducted July 17 and 29, across the U.S., Canada, and Mexico. The respondents work at publicly traded or private organizations with more than $1 billion in annual revenue.
I asked Gallucci if there was any noteworthy change in the Q3 2024 survey as compared to Q3 2023. “One thing that stood out is that 55% of CFOs now see debt financing as attractive,” he said. And that’s a “sizable jump in enthusiasm” from what he has seen over the past few years. “It’s possible CFOs were reacting at the time to reports that the Fed might be close to cutting the overnight rate, which it did today,” Gallucci said.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna
