- Win McNamee/Getty Images
During earnings season, executives of public companies not only lay out the results of the prior quarter, but also have an opportunity to explain why they may have fallen short or what hurt their businesses.
Typically, companies have a stable of reasons their quarterly results could have been better. In addition to old standbys such as foreign exchange rates, many companies also focus on a single macro event to pin the blame on for lackluster results. For instance, in the second quarter, a number of companies cited Brexit as having a large effect on their businesses.
It appears that for the third-quarter earnings season – which unofficially kicks off Tuesday with Alcoa, an industrial-metals producer, reporting – the theme will be the US presidential election.
Essentially, the argument executives have used so far when talking about the election is that uncertainty over the result is weighing on consumer sentiment and causing people to be more cautious about where they spend their money.
“I think where we’re, what, five weeks away from a general election – I think there’s just great uncertainty as to what’s going to happen in the US in particular as a result of the outcome of the election,” Yum! Brands CEO Greg Creed said in his company’s earnings call on Thursday. “It goes without saying that people are sort of trying to decide who to choose and what the impact will be on the economy. And I think people maybe just hunkering down a little bit.”
Carnival Cruise Lines also cited the election as a reason fewer people are booking vacations through the company.
“We’ve anticipated a bit of an election slowdown, as historically there’s always been a little falloff in booking volumes around election time,” CEO Arnold Donald said during the company’s third-quarter earnings call. “And so there could be some of that, but in our case again, right now we’re doing so well, and we’re so far ahead, and the pricing is strong.”
This concern even extended back to the second quarter, when Wendy’s used a similar explanation for its less-than-stellar results. Even outside of earnings calls, AT&T CEO Randall Stephenson talked about getting “the election behind us” at a recent Goldman Sachs communications conference.
All of the blame won’t be placed on Clinton and Trump, but CEOs will bring up any effect on incremental demand.
While people may be concerned about the election, recent measures of consumer confidence have exceeded or neared post-financial-crisis highs, and consumer spending remains one of the bright spots of the US economy. So individual companies may have different metrics, but the macroeconomic data seems to indicate people are not slowing their spending because of the Trump-Clinton showdown.