Good morning. It’s Election Day. And for some Americans, that comes with a considerable dose of anxiety, economic and otherwise.
Monarch, a personal finance app and website, shared with me data from its survey of 1,500 Americans ages 18-44 conducted in September and October. Millennials (48%) are cutting back on spending in areas like entertainment, dining out, or subscriptions due to the presidential election or economic uncertainty, while 37% of Gen Z is cutting back on these categories.
Nearly a quarter (23%) of all respondents are delaying major purchases like homes and cars until after the election. And millennial women (regardless of political leaning) are most concerned about their current financial status (57%).
The U.S. economy has been growing solidly, but could election anxiety have an impact?
Up until the third quarter, consumer spending was really the main engine of U.S. growth, Gregory Daco, chief economist at EY-Parthenon, told me. If we start to see more caution in spending, it doesn’t necessarily mean that we're going to have any form of downturn, Daco said. “But if consumers are more prudent, then growth will be slower,” he said.
Peter Ricchiuti, a finance professor at Tulane University’s A.B. Freeman School of Business, thinks this is the best economy in six decades, given the stock market gains and inflation dropping from 9.1% to 2.1%, he said.
I asked him about some consumer caution in spending ahead of the election. “I haven't seen anyone talk about this until this election,” Ricchiuti told me. “I’ve been doing this for 45 years.”
Political misinformation has been going on for a long time, Ricchiuti said. “But making economic decisions based on misinformation is really dangerous,” he said. “Maybe that’s what’s holding some people back.” He said it's the middle class that determines economic health, so making that segment economically confident is important.
‘Focus on what you can control’
Regarding post-election potential volatility in the markets, I also asked Daco and Ricchiuti if they had any advice for CFOs.
“It’s nearly impossible to prepare for the broad range of potential scenarios post-election, but you can focus on what you can control,” Daco said. Ensuring you have a robust planning process, you're managing cash flow, preparedness for any potential scenarios, and agility in reacting to potential policy developments—“that's really all you can do as a CFO,” he said.
Ricchiuti thinks that CFOs are in better shape now for whatever happens because there were “real lessons learned in COVID,” he told me. “And everybody kind of runs the shop a little cleaner,” he said.
It’s corporate earnings that move the stock market, Ricchiuti said. “The rest of it is noise,” he said. “It’s like the first three quarters of an NBA game—it just doesn't matter.”
Sheryl Estrada
sheryl.estrada@fortune.com
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The following sections of CFO Daily were curated by Greg McKenna
