The Truth or Myth of Industry Waiting Until After an Election to Make Decisions
Every election season, the business world rolls out its favorite excuse: “We’ll wait until after the election.” It’s as if companies believe that the election result holds the magic key to all their decision-making—whether to launch a product, expand, or sign off on mergers. But does this “pause for politics” strategy hold up, or is it more of a corporate myth passed down through cautious executives?
The Perception of Uncertainty
Elections bring uncertainty, and businesses, particularly large ones, prefer stability when plotting their next moves. Concerns about possible changes in taxes, regulations, or trade policies often lead to decision delays. However, uncertainty is business as usual. From market shifts to technological advancements, business environments are constantly changing. Waiting for post-election clarity can be an illusion because the business landscape will keep evolving regardless of the outcome.
Government-Dependent Sectors vs. The Rest
Industries that rely heavily on government contracts or regulations, like defense or healthcare, may indeed pause for an election. A new administration could mean shifts in policies or spending priorities, which could impact these businesses. However, for most companies, especially those in tech or consumer goods, the election doesn’t drastically affect their day-to-day operations. For them, the political environment is just one factor among many, and waiting for an election might be unnecessary.
The Myth of Immediate Change
Another reason businesses delay decisions is the belief that election outcomes will lead to rapid, sweeping changes. However, government policies rarely shift overnight. It often takes months or even years for significant regulatory changes to take effect. Meanwhile, companies that wait might miss out on valuable opportunities as competitors move ahead with new products or strategies. The reality is that the impact of an election is often slower and less dramatic than businesses anticipate.
Historical Data: Do Elections Really Slow Business?
The idea that business slows down during elections isn’t entirely a myth, but it’s more nuanced than many believe. According to research from the Federal Reserve, election cycles can cause a slight dip in investment activity, particularly in industries dependent on government decisions. However, the overall economic growth and stock market performance tend to remain steady or even improve during election years. In fact, the S&P 500 has shown positive performance in 82% of presidential election years from 1928 to 2020.
The Comfort of Caution
Sometimes, waiting for the election is more about avoiding tough decisions. Big business moves are stressful and risky, and delaying decisions can feel like a safer option. However, this cautious approach comes at a cost. While one company hesitates, others might seize opportunities, innovate, or capture market share. Playing it safe can result in losing a competitive edge.
To Wait or Not to Wait?
So, is waiting until after the election a truth or a myth? The answer lies somewhere in between. Certain sectors may have legitimate reasons to pause, but for most industries, elections are just another factor in an unpredictable world. Businesses that succeed in the long run are those that embrace uncertainty, plan for various outcomes, and keep moving forward—election or not.