How does the presidential election cycle impact your business?

Spoken | August 9, 2016

What effect does the election cycle have on your business?

politics_election.jpgIn this year, 2016, the United States will elect a new president to lead and govern our nation for the next four years. We’re not here to tell you how to vote (or how we plan to vote for that matter) but we do think it’s interesting to watch the political process unfold. At this writing, it’s anyone’s guess as to who will win this year’s election.

However, in this election year, there are some questions we have about the election in general and its impact on business. For example, are people worried and therefore holding off on certain business decisions or are people more hopeful about the future and therefore more willing to take a risk? Well, perhaps these questions could best be answered by taking a closer look at one particular area of our nation’s economy and how IT responds during the election.

How the election cycle affects the stock market

A recent article published by Merrill Lynch, takes a look at the election process and its effect on the stock market. Since the stock market is a major force in the US economy, it can have more of an effect on businesses than almost anything else. During an election year, what happens in the stock market can have a “trickle-down” effect on business. For example, the more volatile or uncertain the election process is, the more bumpy things can become in the stock market. The stock market tends to like certainty, and when things look uncertain in the election process, this uncertainty can impact the stock market. If an incumbent is up for re-election, less risk is perceived, and the stock market responds accordingly. And historically,  an incumbent will tend to obsess over the economy more during a re-election cycle, so it’s likely that more market-friendly policies will be promoted to boost the incumbent’s chances of re-election.

How the election cycle affects business

dominos.jpgWe would never write a blog post about a subject as controversial as politics without including the WIIFM (What’s In It For Me?) angle. The question is: how does the election cycle impact the small- to medium-sized businesses during an election year? According to an August 2015 article in Economics Help, falling market share prices can impact business investment across the board. Businesses who are seeking to expand and scale can usually raise capital by offering more shares at a lower rate, which becomes a low cost way to borrow money. However, if share prices are plummeting significantly, this can become difficult.

Confidence is another issue that comes into play with the stock market. If tthe stock market is volatile, consumer and business confidence might be reduced, especially if other factors (such as housing prices) are falling as well.

So, does the presidential election impact business as usual in the call center? Perhaps not directly, but it’s like a domino effect: an unpredictable election cycle tends to make the stock market shaky because the market thrives on certainty. The uncertainty in the stock market can then impact whether or not a business will expand or be cautious until things stabilize once the election has been decided.

What do you think? Have you noticed a change in your business since things have started heating up with the upcoming election? Share your experience in the comments.

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