PwC Pulse Survey:
Executive takes on Election 2024

Executive summary

PwC’s October 2024 Pulse Survey shows that executives see economic, political and regulatory risks no matter who wins the 2024 US presidential election. Consider the overall economy. Despite the Federal Reserve’s recent interest rate cut and falling inflation, 61% of respondents agree that the US economy will experience a recession in the next six months, up from 49% in our June 2024 survey.

That unfavorable outlook isn’t necessarily linked to either presidential candidate. When it comes to policy risks, executives cite US economic policy as the biggest risk under either candidate. Moreover, executives are wary about key policies from both candidates. Seventy-five percent agree or strongly agree that a 10% universal tariff on imports (as proposed by Trump) would significantly hinder their growth, and 75% agree or strongly agree that they would significantly reduce their domestic investments if there were a US corporate tax rate of 28% (as proposed by Harris).

Uncertainty, volatility, complexity and risk — it’s a tough time to lead companies right now. 

Here are some of our key findings.  

• Recession risks remain. Despite falling interest rates, 61% of executives surveyed see a potential recession in the next six months. Why? Geopolitical tensions, concerns about a slowing labor market, uncertainty about the election, a distracted electorate and consumers still squeezed by higher costs are contributing. 
• Cyber threats continue to top the list of business risks. Although executives are worried about other factors — such as profit pressure, geopolitical tensions, new legal and reputational risks related to artificial intelligence (AI) — cyber threats remain the top business risks, cited as a moderate or serious risk by 75% of executives in our survey.
  
• Regulation is just one thing keeping executives up at night. Although the presidential race remains extremely tight, roughly three-fourths (76%) of respondents expect a divided government in 2025, 77% expect an increase in executive orders and 75% expect both more regulation and litigation. 
  
• Protectionist policies will make companies less competitive. Seventy-one percent of executives say that trade and tax policies will hurt US competitiveness regardless of who becomes president. There are some differences though. Executives see higher taxes and climate as policy risks under Harris, trade and foreign relations as policy risks under Trump.
  
• State governments and federal regulators have a bigger impact on business than the presidential election. When asked which government entities affect their company most, more than half (53%) rank state governments and federal regulatory agencies (52%) in their top 3. Those were followed by local governments (44%) and Congress (43%) — all ahead of the president.

A mixed macroeconomic outlook

While key indicators are moving in the right direction, particularly inflation and lower interest rates, executives responding to our survey aren’t convinced the US economy is out of the woods just yet. Among respondents, 61% see a recession happening in the next six months, a surprising jump from the 49% who predicted a recession in our June 2024 Pulse Survey. 

What may be going on? For one, forecasts and US macroeconomic data have been all over the map. For example, the Labor Department’s August jobs report was weaker than expected while September’s report came in much higher than expected. The Fed’s September Beige Book showed contracting economic activity in manufacturing and reduced home sales. Meanwhile, real gross domestic product increased at a 3% annualized rate in the second quarter, according to the US Bureau of Economic Analysis. It may also be methodological. Most executives responded to our survey before the September Federal Open Market Committee decision to lower interest rates.

Despite the Fed’s move, there continues to be uncertainty. On September 30, 2024 – less than two weeks after the Fed’s rate cut decision – Federal Reserve Chairman Powell noted that there is a bit of an unresolved tension between data that speaks of a cooling labor market and the GDP data, which has remained strong.

This uncertainty, along with the election and the geopolitical landscape, may be translating into broader recession concerns. Executives may also be preparing for the worst, despite what more optimistic economic reports show.

Among specific sectors, respondents in energy, utilities and resources are the most pessimistic, with 67% expecting a recession (consistent with our June survey). But respondents in other industries all showed double-digit increases in the percentage of executives expecting a recession.

CEOs are keenly aware of what a recession means for business: 44% say that changing priorities to prepare for a potential recession is a significant challenge. 

What you can do   

• Scenario plan for a wide range of economic conditions in the near term. Build a scanning capability that can provide the most accurate forward-looking data on the overall economy. Look at data holistically rather than only headline-level information.
• Maintain a lean balance sheet. Stay disciplined in areas such as cash management and net working capital. Make targeted investments without getting overly ambitious with bet-the-company measures.

Business risks abound

In addition to macroeconomic risks, executives see a decidedly risky business environment as well. Three-fourths of executives say that cyber attacks are a moderate or serious risk, topping the list (and in line with our surveys over the past several years). Evolving technology, ever-present data, work-from-home policies and a growing array of bad actors are all creating new points of vulnerability — and pushing companies to assess their cyber defenses. At the same time, generative AI (GenAI) is making cyber attacks more creative and convincing — the latest shift in the ongoing conflict between companies and cyber attackers.

The cyber challenge is compounded by the fact that many US companies have significant technical debt. Many are running outdated systems and software that trigger hidden costs and create new opportunities for cyber criminals — and this is putting significant pressure on CEOs from the board and technology leaders to make upgrades.

Among other business risks, executives point to margin pressure affecting earnings (70%), geopolitical tensions (68%) and AI legal and reputational risks (63%). Climate change remains relatively low on the list, but the share of executives identifying it as a key business risk continues to increase, from 50% in August 2023 to 61% in June and 64% in our current survey.

What you can do 

• Shore up cyber defenses. Continue to invest in cyber to help confirm that your solutions are keeping pace with evolving threats. For example, while GenAI is spurring new types of phishing attacks, it is also being integrated into cybersecurity solutions by leading vendors.
• Confirm that climate doesn’t fall off the leadership agenda. Sustainability initiatives take time and often require collaboration with other stakeholders. Don’t wait to take action.
• Put the right AI governance in place. The technology is extremely powerful, so you need powerful safeguards in place. Make sure that you have strong controls for the use of source data and how applications get implemented and that you have a process for human verification.
  

The election is a toss-up; complexity is a sure thing

The presidential election is playing a key role in how executives are preparing for the future and thinking about risk and growth. Three quarters of respondents say the outcome of the election could significantly change how they do business. Specifically, 75% say the outcome will affect their business decisions around financial forecasts and budgets somewhat or to a great extent, and 71% say the same about acquisitions or divestitures.  

Similarly, 76% agree or strongly agree that there will be divided government after the election. That outcome would essentially serve as a brake on legislation because neither party has full control. However, divided government could lead to more executive orders, which 77% of executives expect regardless of who wins, as the president may use them to bypass legislative gridlock. In particular, trade policy (setting tariffs, negotiating trade agreements and imposing trade sanctions) has largely shifted from the legislative branch to the executive over the past 60 years. Widescale tariffs can be issued through executive order, though they would almost certainly be challenged in court.

Regulation is heavy on the minds of executives as well, with 75% saying that there will be more regulation in the future, and 75% anticipating a more litigious business environment. CEOs bear the burden most acutely, with 76% saying that the federal regulatory environment is on their mind often or constantly. 

 What you can do  

• Invest in regulatory compliance. Stiffer business regulation is probably here to stay — and may even get more burdensome. Take steps to position your business (both operationally and financially) so it remains in compliance with shifting rules.
  
• Have your M&A strategy and capabilities in place. As interest rates come down and business activity accelerates in some sectors, companies should review their portfolios to prepare for strategic deals. That means building strong due diligence capabilities and having a list of potential targets (or buyers for divestitures) in place.
  
• Prepare for executive orders. Prepare for policy shifts that could happen quickly and without legislative debate. Understand the implications for your compliance, operations and strategic planning. Keep in mind that executive orders may also be subject to legal challenges, affecting both the timing and scope of changes.

Policy risks on the left and the right

Executives see different policy risks depending on the election outcome, though there are some common ties. Considering a hypothetical Harris or Trump administration, US economic policy was the highest-ranked risk for both, with 43% of executives citing it among the top 3 risks under Harris, 37% under Trump.

Moreover, executives are worried about the campaign positions of both candidates.

• Regardless of who is president, 71% of executives say that post-election trade and tax policies will hurt US competitiveness.
• Considering a corporate tax hike to 28% proposed by Harris, 75% of executives say that their company would significantly reduce their investments in the US.
• Considering the 10% universal tariff on imports proposed by Trump, 75% of executives agree or strongly agree that it would significantly hinder their company’s growth.

Executives also point to some slight differences in the policy risks posed by the two candidates. Under Harris, respondents are more likely to cite US corporate tax policy (36% including it among the top 3 policy risks, compared with 31% for Trump) and regulatory oversight (33% for Harris, 28% for Trump).

Conversely, under Trump, executives point to foreign relations as a key policy risk (32% versus 25% for Harris) and trade policy (31% versus 27% for Harris). 

What you can do

• Build — or strengthen — your relationships in Washington. Cultivate ties with policymakers, regulatory agencies, lobbyists and other key stakeholders to shape future regulation or, at a minimum, gain a better sense of what’s coming.
  
• Focus on tax efficiency. Regardless of what happens to the corporate tax rate, redouble your efforts to optimize your company’s tax structure. Take into account potential tax credits, corporate structure and timing of revenue recognition.  
• Adjust the supply chain. Geopolitical issues, climate-related disruptions and more protectionist policies are all putting more stress on supply chains. New tariffs would increase the cost of intermediate inputs, potentially making it beneficial to change suppliers. On the other hand, supply chain optimization can help offset some of the effects of a higher US corporate tax rate.

Continued investment coming either way

Executives say they’ll continue to invest at current levels or increase their investments in many areas regardless of who becomes president. Regarding AI, for example, 52% say they would increase their investment under a Harris administration, and 53% say the same under a Trump administration.

Still, the data does show some differences.

• Compliance and regulatory affairs: More than half of executives (56%) say their company’s investment in these areas would increase under Harris, compared with 47% who say the same under Trump.
• Sustainability: Fifty-five percent say their company would invest more in sustainability under Harris, while just 46% say this under Trump. Eleven percent say their sustainability investments would decrease under Trump, compared to 4% under Harris.
• Capital projects in the United States: More than half (53%) say investments would increase under Trump, compared to 49% under Harris.
• Hiring: Just over half (52%) say investments would increase under Trump, compared to 50% who say the same under Harris. Eleven percent say their investments in hiring would decrease under Harris, compared to 6% under Trump.

What you can do 

• Stay the course. Avoid making short-term investment decisions based on a single administration. Some incremental adjustments may be required, but most strategic investments should be made as part of a long-term plan. This is especially true in areas with proven value, like AI.
• Focus on no-regrets measures. Identify the investments you will need to make no matter who is in the White House — particularly innovation and digitization — and prioritize those over investments that hinge on a specific policy outcome.
• Continue to take calculated risks. In a more uncertain environment, it’s understandable that some leadership teams would want to wait it out and avoid risky moves. That isn’t a realistic option. The odds become more dynamic, but the need to take calculated risks remains. In fact, not taking any risks is potentially the biggest risk you can take right now. 

Beyond the big race 

Despite the attention paid to the presidential race, executives are looking beyond that to the true drivers of their business. When asked which areas of government affect their company most, more than half rank state governments (53%) and federal regulatory agencies (52%) in their top 3. Those two were followed by local governments and Congress — all ahead of the president.

State governments and federal agencies also ranked higher than the president across industries. With the federal government deadlocked in recent years, some states have been more active, particularly in policy areas such as privacy, sustainability and AI. Notably, risk leaders, CIOs and tax leaders all say that complying with new legislation and regulations is a significant challenge to achieving their priorities. 

What you can do

• Proactively engage with lawmakers at all levels. Advocate for policies that help support your industry's growth and address regulatory challenges. Building strong relationships with government officials through regular dialogue and participation in industry coalitions can help keep business interests in mind during legislative decision-making.
  
• Participate in comment periods. When federal agencies issue new regulations, they typically allow for public comment periods. Executives should participate in these opportunities to shape how the regulations may be implemented.
  
• Monitor legal precedents. Pay close attention to court rulings, especially from federal appeals courts and the Supreme Court. These rulings can shape how executive orders are interpreted and enforced. Courts may also issue temporary injunctions to delay implementation while cases are litigated, creating uncertainty for businesses.

About the survey

Between September 12 and September 19, 2024, PwC surveyed 709 US executives, including CFOs and finance leaders (14%), tax leaders (13%), risk management leaders, including CROs, CAEs and CISOs (10%), CIOs, CTOs and technology leaders (11%), CHROs and human capital leaders (9%), COOs and operations leaders (11%), corporate board directors (12%), CMOs and marketing leaders (11%) and CEOs (9%). Respondents were from public and private companies in six sectors: industrial products (29%), consumer markets (29%), financial services (13%), technology, media and telecom (13%), health industries (5%), energy and utilities (8%), and other (2%). The Pulse Survey is conducted on a periodic basis to track the changing sentiment and priorities of business executives.