While the 2020 presidential election is still a year away, some business owners see their customers already becoming more cautious because of the unknowns about who will be the next president, and which party will control the Senate.
At Myron Moser’s industrial equipment company, some customers have told him they’re taking fewer risks.
“We’ve seen capital being freed up for projects at a much slower place since the end of the first quarter,” says Moser, CEO of Eden Prairie, Minn.-based Hartfiel Automation. Moser is aware that there are other factors at work, including the U.S.-China trade war and the slowing economy, but he says of the election campaign, “it’s part of the stew.”
Presidential election years can be tough on small and mid-sized businesses – whether customers are consumers or other companies, they tend to cut their spending when they’re uncertain about what lies ahead. The sharp divide in the country over President Donald Trump’s personality and policies, the impeachment proceedings against him in the House and the lack of a clear front-runner among Democratic presidential candidates make some businesses hesitant about making big commitments and investments, and shake consumers’ confidence, owners say. The uncertainty is similar to what Moser saw in 2016, when his order backlog fell 38% through October even as the economy was doing well.
“Companies were sitting on their capital to see what would happen” in that year’s presidential election, Moser says.
Owners aren’t putting their businesses on hold, but they can find it’s harder to strategize amid uncertainty about the election, says John Gasper, an economics professor at Carnegie Mellon University’s Tepper School of Business.
“They don’t have all the information they need right now, so they’re trying to make the best decisions they can give the information they have,” he says.