Road to Election 2020
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THIS REPORT IS EMBARGOED UNTIL 1:30 PM ET ON SEPTEMBER 15, 2020 pwc.com/us/election2020 Road to Election 2020 PwC Pulse Survey — September 15, 2020 findings THIS REPORT IS EMBARGOED UNTIL 1:30 PM ET ON SEPTEMBER 15, 2020 US economy needs more stimulus even as business leaders see improved revenue prospects US business leaders signal clear support These findings come even as a quarter 20 95% 54% for more federal COVID-19-related of companies see prospects improving say their own say some type of strongly agree a stimulus. Executives uniformly see the for their own business in 2021 as a result business needs no fiscal policy action federal strategy for need for a federal pandemic response of actions taken throughout the year to further fiscal policy is needed pandemic response to bolster an emerging “two-tier” US return to growth in the new stay-at-home support is critical economic recovery. Until the US has economy. One in four respondents (28%) its COVID-19 outbreaks under control, expect an increase in company revenue the pace of jobs growth remains touch- over the next 12 months, while 56% and-go. While 20% of respondents expect decreases. PwC surveyed a total say their own business needs no of 578 US corporate leaders, including further fiscal policy support, just 3% CFOs, COOs, CHROs, and tax and risk agree that the US economy does not leaders from August 28 to September 3. need another round of stimulus. Executives across the C-suite also expect Nearly all business leaders surveyed corporate taxes will eventually rise to (95%) say some type of fiscal policy help pay for pandemic spending and that action is needed to support businesses trade restrictions will increase regardless and/or consumers. Moreover, 54% of the outcome of the US election in “strongly agree” a federal strategy November. Any change in US tax policy for pandemic response is critical to direction is being closely watched. improve consumer confidence, which continues to trend downward. PwC Pulse Survey: Road to Election 2020 September 15, 2020 | 1 THIS REPORT IS EMBARGOED UNTIL 1:30 PM ET ON SEPTEMBER 15, 2020 Why it matters Support for pandemic stimulus We expect prospects for reaching an Companies have a big leadership role to he US economy needs My company needs agreement on a new round of stimulus relief play if stimulus talks continue to stall. The --related policy support --related policy support of at least $1 trillion (Phase 4) to become focus will shift to how corporate efforts more difficult by the day as the general are supporting recovery by protecting 51 55 election nears. While there is common public health and employment. Tree Tree ground on some provisions, including relief 3% usess r 2 usess r suer suer for small businesses and unemployment e S ey y y sur sur benefits, negotiations are faltering over the Policy-related complexities are spiraling. es ee es ee scope and overall cost of the legislation. Responses show expectations that the re ly re ly November election will settle some, but not sur sur all, of the questions over future direction Absent policy action, business leaders of policies that are important to business 44% 2 in consumer-facing industries could leaders. Creesve Creesve experience significant headwinds. Consumer all fiscal policy all fiscal policy confidence remains fragile despite the levers levers upturn in economic growth. Overall, 46% of CFOs remain concerned about the financial impact of the pandemic. C1rele ly sur es e S ey s ee rer el rever r e e ees e e ur w usess sw reses w re sure ls y u 1 ue ru Sure PwC Pulse Survey Seeer , 22 se 5 PwC Pulse Survey: Road to Election 2020 September 15, 2020 | 2 THIS REPORT IS EMBARGOED UNTIL 1:30 PM ET ON SEPTEMBER 15, 2020 A third are sure of higher corporate taxes — no matter who wins Most respondents expect business tax rates President Trump and former Vice President utlook: ax rates will rise in order to pay for - relief regardless to rise in order to pay for COVID-19 relief Biden have set out widely different of the outcome of the US election eses w srly ree (70%), with 35% in “strong agreement.” Their approaches to tax. If Biden is elected, views likely reflect concerns that eventually chances for a significant tax overhaul will ll there will be a price to pay for the increase hinge on whether Democrats take control usres in federal spending, tax deferrals and other of the Senate while also retaining control forms of relief. of the House. A continuation of divided 5 government is likely to create challenges for The Congressional Budget Office in either candidate to see their campaign tax September forecast that a budget deficit proposals enacted. for this year may be as high as $3.3 trillion, ery, Tely, e l el usrl Csuer representing about 16% of US GDP and The headline corporate tax rate is just ules eleus serves usres rus res more than triple the shortfall in 2019. A one part of the picture and needs to be new round of relief would add to the US considered with respect to major tax debt burden. and policy provisions at play. Given the complexities, tax executives in multinational Keep in mind companies are identifying the top issues Business tax rates are a prominent for their businesses now. They’re working 0 44% 34% 33% 2 2 election topic, but policy may fluctuate to model outcomes and scenarios for Sure PwC Pulse Survey less dramatically. A faltering recovery may the impact of tax policy changes across Seeer , 22 se 5 ery, ules ely, e us l serves 15 el usres 55 generate support for more deficit-financed jurisdictions, stressing tax as a crucial usrl rus 15 Csuer res stimulus as a policy response over raising tax business issue facing company leadership, rates during a downturn or even in the early audit committees and boards given the stages of recovery. impact of higher taxes on cash flows and investment decisions. PwC Pulse Survey: Road to Election 2020 September 15, 2020 | 3 THIS REPORT IS EMBARGOED UNTIL 1:30 PM ET ON SEPTEMBER 15, 2020 Expect a more challenging environment for trade Executives recognize US trade relations are in the midst of What to watch he federal government should implement a a transformation that will last beyond November. On the one President Trump’s trade policies contrast sharply with hand, the pandemic has accelerated the desire to unwind strategy to boost domestic production of former Vice President Biden’s. Yet consensus is building in reliance on long and highly outsourced supply chains. On the essential goods to help the US economy Washington to ensure the US has access to supplies, which other, decoupling from global trade partners is difficult to do. eses w srly ree may materialize in bipartisan interest to increase incentives President Trump’s Phase I trade agreement with China for reshoring over the longer term. Policy levers could include to increase purchases of US products is unfulfilled and domestic investment tax incentives, tariffs or mandates for Phase II is now delayed. As a result, progress is unlikely products to meet certain thresholds to be considered made in All leaders 46% in the medium term on key issues: biopharma technology the US. transfer, cyber infringement, civil nuclear technology, cloud US producers are responding, yet most manufacturers service and data localization. seem to be merely forging plans. Relocation decisions are s Findings show executives support aspects of the “made- costly and can take years to deliver on today’s assumptions. ee 57% here” policy momentum. For example, 46% “strongly Manufacturers continue to make use of a mix that includes leers agree” that the federal government should boost domestic improved workflow automations and analytics and more production of essential goods to help the US economy. When structured options to quickly divert around issues of supply Cs 55% asked specifically about US-China trade, 28% “strongly availability or demand. agree” that trade restrictions will increase, regardless of the Looking ahead, investment tax credits or other types of outcome of the election. Cs incentives for setting up local R&D or operations could 39% encourage more onshoring. Producers are looking to shorten the lead time with lower freight and lower inventory float, as well as closing the wage gap with other locations. Sure PwC Pulse Survey Seeer , 22 se 55, s ee leers se , C se , C se 21 PwC Pulse Survey: Road to Election 2020 September 15, 2020 | 4 THIS REPORT IS EMBARGOED UNTIL 1:30 PM ET ON SEPTEMBER 15, 2020 Actions you can take now Overall, findings suggest many companies are adopting a Here’s how some companies develop an s your company more likely to increase “wait-and-see” approach before addressing investment that actionable point of view on the implications of investment in any of the following areas with a may be linked to substantive US policy change. At the same policy and elections shifts. second term of the current administration time, executives don’t intend to let up on investments that are A new administration crucial to competitiveness in 2021. Ask explicitly how scenario In this environment, They are forging ahead with what they can control plans consider policy businesses face brand and Curre sr ew sr despite government gridlock and uncertainty about future signals as well as economic reputational issues as well stimulus support. For example, close to half of executives indicators in their demand as policy uncertainties. For l 49% 44% say investments in digital transformations will increase scenarios.