How Much Does the Presidential Election Matter to CEOs?
Do you ever notice that, right around this time during every presidential election cycle, the candidates always start talking with much urgency about how it’s the “most important election of our lifetime”? We’re not so sure about believing that hype. As far as we can remember, total Armageddon has never occurred after Election Day.
As a wise man once said decades ago, “No matter who wins, I’ll still pack my lunch and go to work in the mines.”
And yet, a recent poll by Investopedia found that 61% of respondents are worried about the impact of the 2024 elections on their investments. That translates to worries for CEOs.
Here are some common concerns CEOs and other top executives at companies of all stripes may be thinking about, and looking for, as we run up to the “most important election of our lifetime.”
Typical concerns as election hype swirls
Uncertainty. A recent survey of CEOs by KPMG found that top executives ranked political uncertainty as their top risk to growth over the next three years. A CNN poll had a similar finding, reporting that 51% of CEOs believe political uncertainty is the top risk to growth.
Another disputed election. This is the last thing anybody wants, CEOs included.
Economic policies. Issues like tax breaks and the tax rate for corporations, a candidate’s stand on trade impacting the supply chain, minimum wage hikes, and other economic policies matter to the heads of large companies. Which candidate will be more favorable to business?
Geopolitical issues. With war and unrest all over the globe, CEOs may be concerned on a personal level, but for business, geopolitical unrest might mean supply chain headaches, price hikes and trade disruption. They are looking for candidates who will work to quell that unrest.
Social issues. There are pressures on companies in all sectors now about things like sustainability, climate change, carbon neutrality. But also, more than ever before, companies are supposed to stand for something larger than the product or service they provide. Which candidates fit best with their brand?
What CEOs may want to see from candidates
Stability. The ancient curse, “May you live in interesting times,” is on the minds of many execs, who prefer boring, old stability and predictability in order to plan, forecast and hit those numbers.
Business-friendly policies: No matter which political party individual execs subscribe to, the bottom line for most is a candidate who is business friendly, promising lower taxes, fewer regulations, and streamlined processes.
Global policies. Many execs have big concerns about supply chain disruption after the past few years, and any politician who can normalize trade and global relations will be a welcome relief.
The good news
Despite the hype surrounding this (and every) election, there is good reason to be optimistic this year. In fact, most CEOs are. According to that CNN poll, “optimism outweighs pessimism among CEOs” for the first time in two years. And just 27% expect economic conditions to worsen, down from 47% in the fourth quarter of 2023.
The bottom line for business during this election year? Focus on efficiency, operational improvements and increasing throughput. That’s the port that will help you weather any political storm.
If history teaches us anything, it’s to heed those long ago words from that miner. Markets tend to rise in presidential election years, no matter who is on the ballot. That same Investopedia article sites the S&P 500 showing positive returns in 20 of the last 24 election years, dating all the way back to 1928.
That’s 83.3% of the time.
