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
Leaderboard
Christopher Caridi was promoted to CFO of Wiley (NYSE: WLY), an academic publishing company, effective immediately. He will succeed Christina Van Tassell, who is leaving the company on Oct. 1. Caridi has served as corporate controller and chief accounting officer since joining the company in 2017. Prior to Wiley, he held several executive roles at Thomson Reuters, including controller and global head of accounting operations.
Hamza Choudhry will be appointed CFO of Global Petroleum Limited (AIM: GBP), an oil and gas exploration company. Choudhry began his career at Grant Thornton before eventually serving in a lead accounting and governance at Siemens across several multibillion-dollar business segments, including Siemens Energy and Siemens Financial Services. He has also been a professional equities investor for the last six years with a focus on small-cap opportunities in the commodity sector.
Big Deal
The Federal Reserve cut interest rates on Wednesday for the first time since the early days of the COVID-19 pandemic, lowering the Federal funds rate by 50 basis points from a two-decade high. The move comes amid a significant cooling in the labor market as the central bank declares victory in the fight against inflation.
“It is time to recalibrate our policy to something that is more appropriate given the progress on inflation and unemployment moving to a more sustainable level,” Fed chair Jerome Powell said.
The Federal Open Market Committee voted 11-1 to slash the Fed funds rate to a range of 4.75 to 5%, with Fed governor Michelle Bowman advocating for a more customary quarter-point cut. The Fed projected lowering rates another half point by the end of the year, with the so-called “dot plot” indicating it expects rates to fall to 2.9% through 2026.
Wall Street had become increasingly optimistic about a 50-point cut in recent weeks, and traders initially cheered the Fed’s decision as the Dow briefly rose 375 points. Stocks closed in the red, however, pointing to fears among some investors that the economy is perhaps cooling faster than the central bank anticipated.
Going deeper
“Luminate Capital scores first acquisition for Fund IV, buying AbsenceSoft,” is a new report from Fortune’s Luisa Beltran. The climate for mergers has remained slow throughout the summer, but private equity funds like Luminate, founded by Silver Lake alum Hollie Haynes, are still finding ways to do deals. The firm acquired AbsenceSoft, which provides software that helps companies manage leaves, like maternal and paternity, in a transaction that closed last week.
Overheard
“Without the support of the UN, American businesses would be at a severe disadvantage that global rivals like China and Russia would be all too happy to exploit. And without U.S. leadership championing core values in the UN—including women’s rights, the rule of law, and due process—the negative consequences for the U.S. economy and society would be profound.”
— Whitney Y. Baird, president and CEO of the United States Council for International Business, and Peter Yeo, president of the Better World Campaign and senior VP at the United Nations Foundation, wrote in a Fortune opinion piece about why American businesses benefit from the UN.
