Yesterday, Duke University in partnership with the Atlanta and Richmond Federal Reserve Banks published their CFO Survey results for the third quarter.  We discussed the bulk of the findings of the survey in last night’s Closer, including the chart below showing what CFOs reported to be their most pressing concerns. As shown, monetary policy continues to be the most common concern among CFOs albeit that share was the lowest in a year as rate cuts have begun.  Sales/Demand was the next most common response having picked up from only 8% the previous quarter to 9.6% in Q3.  Meanwhile, labor quality/availability as a concern has fallen steadily down to the lowest level in at least a year at 9.5%. Conversely, the share of respondents saying health of the economy is the most pressing concern more than doubled to 8.7% of responses.

There are not always the same reasons reported quarter to quarter, and Q3 featured a new and timely reason: Political Climate/Election.  Any political tensions in the US aside, this reason did rank low, accounting for only 3.8% of responses which is roughly equal with the share reporting non-labor costs and regulation as the biggest problems.

In addition to adding politics to the most pressing concern question, the survey featured a couple of election-specific special questions.  In response to the question “Has uncertainty related to the upcoming U.S. Presidential and Congressional elections led your firm to do any of the following to your investment plans?”, roughly two-thirds of firms reported that there has been no change. In other words, a vast majority of firms are pressing ahead with investment plans regardless of the election outcome. As we discussed in our Investing and Politics slides (which is worth checking out given the upcoming election), most of the time, politics is less impactful on business than we may initially think.

With that said, we would be remiss to not mention there are another 36.7% that reported they would either cancel, postpone, delay, or scale down investment plans on account of the election (note: respondents could select more than one option; percentages do not sum to 100). The survey additionally asked what CFO’s most important policy topic is for the election. Predictably, regulatory policy ranked as the highest followed by monetary policy. Fiscal policy and taxes were the next two issues to also account for more than half of responses.

Checking in on the election, today marks 40 days until Americans take to the polls.  Using data from ElectionBettingOdds.com which shows aggregate betting market odds for the outcome of the election, Harris is narrowly favored with a 51.5% chance to Trump’s 47.5% chance.  Whereas over the summer the election was looking like it could be a landslide for Trump with his odds closing in on a 70% chance of winning, since Biden dropped out with Harris as the replacement, Democrats have seen their odds improve considerably.  Over the past couple of months, there has been a decent amount of back and forth in betting markets’ favoritism and in the past several days those odds are again narrowing.  As shown in the second chart below, the odds at 40 days until the election are now the narrowest yet for the comparable point in time versus the 2016 and 2020 elections.  While the race is close currently, we would note that on the day before Election Day in 2016 and 2020, the odds widened out massively with Democrats heavily favored each time. Ultimately, those odds proved right once (2020) and wrong once (2016).  That means while betting markets can be a gauge on what will happen in November, the findings are far from a sure thing.