The US Election Cycle and Your US Expansion | A CFO and Board Perspective

US election cycles tend to create disproportionate concern at board level, particularly for European companies evaluating expansion risk. Political rhetoric increases, policy statements become more aggressive, and external advisors often recommend waiting for clarity.

From a governance and risk perspective, this instinct is understandable. From an operational and financial perspective, it is rarely justified.

The US business environment does not materially change during most election cycles. The structures that determine cost, compliance, hiring, and revenue generation continue to function as normal.

However, certain federal policy changes can have immediate operational impacts. Trade wars and tariffs directly affect import costs, supply chain pricing, and market competitiveness. Significant changes to federal agencies – such as the recent restructuring at the National Institutes of Health that disrupted funding flows for life science companies—can materially impact specific sectors. These risks require CFO-level assessment, particularly for companies in affected industries.

Understanding US Election Cycles

The United States operates with multiple election cycles, not just the presidential election every four years. Understanding this structure helps boards assess actual risk versus perceived volatility:

Presidential Elections occur every four years (2024, 2028, etc.) and receive the most media attention globally. These include congressional races and can produce significant policy shifts.

Midterm Elections happen two years after each presidential election (2026, 2030, etc.). While voter turnout tends to be lower, midterms can dramatically shift congressional control. The upcoming November 2026 midterms, for example, could result in a change of majority in both the House and Senate – a shift that might introduce new legislative priorities affecting business taxation, trade policy, or regulatory frameworks.

Special Elections occur periodically to fill vacant seats and typically have limited national impact.

For boards evaluating expansion timing, presidential election years create the most noise, while midterms often produce more tangible legislative change with less international attention.

Economic Performance Data

According to the U.S. Bureau of Economic Analysis, real gross domestic product grew at an annualized rate of 4.4 percent in the third quarter of 2025 – one of the stronger quarterly readings of the year. However, quarterly figures can differ significantly from annual averages because GDP is reported at an annualized quarter-to-quarter rate.

Year-over-year data for the third quarter indicates about 2.3 percent annual growth compared with Q3 2024. Broad annual averages and professional forecasts suggest US real GDP growth for the whole of 2025 is likely in the 1.7–2.3 percent range:

• The Philadelphia Fed’s Survey of Professional Forecasters expected around 1.9 percent growth for 2025 on an annual-average basis
  
  
• Private analysts (including EY) anticipated around 2.3 percent average GDP growth for the year as a whole

Some early-year quarters in 2025 experienced weak or even contractionary growth, which pulls down the annual average despite strong Q3 performance.

Forward-looking expectations remain constructive. Goldman Sachs forecasts approximately 2.5 percent US GDP growth in 2026, exceeding many peer economies and maintaining the US position as the most attractive large developed market for expansion.

Corporate profits increased materially through 2025, reinforcing business confidence and investment capacity. According to the Bureau of Economic Analysis, corporate profits from current production increased 3.4 percent in Q3 2025, following increases in the previous two quarters. Profits of domestic financial corporations rose 8.1 percent, while profits of domestic nonfinancial corporations increased 2.0 percent. This sustained profitability demonstrates that US businesses continue to perform well regardless of election cycle positioning.

These indicators reflect continuity, not disruption.

Political Risk vs Operational Risk

From a board perspective, political risk is often conflated with operational risk. In the US system, the two are largely separate.

Federal elections influence long-term policy direction. They do not typically alter the mechanics of business operations in the short to medium term. Many of the elements that drive day-to-day risk sit at the state level.

Employment law, payroll compliance, benefits administration, business licensing, and tax incentives are primarily governed by individual states. These frameworks are stable, predictable, and largely insulated from federal election cycles.

For a CFO assessing risk exposure, this distinction matters. The likelihood that an election outcome will disrupt payroll, invalidate employment contracts, or materially change compliance obligations is extremely low.

However, CFOs don’t only evaluate operational compliance risk. They also assess market conditions and revenue potential. Federal policy changes—particularly around trade, tariffs, sector-specific regulations, or federal funding programs—can directly impact how markets behave when companies try to sell their goods or services. A nuanced risk assessment accounts for both operational stability (which remains high during elections) and potential market volatility in specific sectors affected by policy shifts.

What the Data Shows During Election Periods

US election years have historically coincided with continued economic activity rather than contraction. Consumer spending remains resilient, accounting for roughly two-thirds of economic output.

Business formation and foreign direct investment also tend to remain stable during election cycles. According to SelectUSA, the United States attracted $422 billion in foreign direct investment in 2024, maintaining its position as the world’s largest recipient of FDI. Companies do not suspend market entry decisions simply because campaigns are underway.

In practice, election cycles affect sentiment more than fundamentals.

The Cost of Deferring Expansion Decisions

Boards often assume that delaying a US expansion during an election cycle reduces downside risk. In reality, delay introduces its own financial and strategic costs:

Talent Availability: Top candidates and specialized skill sets get hired quickly. Waiting six to twelve months can mean entering a tighter labor market with higher salary expectations.

Incentive Programs: State and local economic development incentives are allocated on a first-come basis. Companies that delay miss current funding cycles and may face reduced availability in future periods.

Market Position: Customers and partners commit to suppliers that are already present in market. Delayed entry means competitors establish relationships first, increasing customer acquisition costs.

Competitive Timing: Early movers capture market share during periods when competitors hesitate. This advantage compounds over time.

From a capital allocation perspective, the risk of missed opportunity is often greater than the risk of entry. Expansion delays can compress future timelines, increase hiring costs, and force entry under less favorable competitive conditions.

For CFOs, this is a familiar trade-off. Risk avoidance is not risk neutral. It simply changes the risk profile.

Why Experienced Operators Focus on Fundamentals

Foothold America has supported European companies entering the US market for more than a decade. During that time, we have worked through multiple election cycles, policy shifts, trade disputes, and periods of heightened political rhetoric.

Across those cycles, the pattern has been consistent. Companies that anchor decisions in fundamentals and operational readiness outperform those that wait for political certainty.

The US system is designed to absorb political change without destabilizing business operations. That design has held through administrations of both parties and during periods of elevated political tension.

From a governance standpoint, this predictability is a feature, not a risk.

A Practical Framework for Board Decisions

A sound, board-level expansion decision should focus on questions that are measurable and within management’s control:

• Is there validated demand for the product or service in the US market?
• Is the chosen state aligned with cost, talent, and regulatory requirements?
• Is the operating model compliant and scalable?
• Is the organization prepared to manage US employment, payroll, and reporting obligations?

If these criteria are met, the election cycle should not be a gating factor.

The Bottom Line for Boards and CFOs

US elections generate volatility in headlines, not in business fundamentals.

Economic growth remains solid. Consumer demand persists. State-level business environments continue to compete aggressively for international companies. Operational risk remains stable and manageable.

For boards and finance leaders, the relevant question is not whether the political environment feels noisy. It is whether the expansion decision is grounded in data, preparation, and execution capability.

Companies that enter the US market based on fundamentals rather than sentiment tend to build durable positions. Those that wait for political calm often arrive later, at higher cost, and with less strategic flexibility.

Foothold America has guided companies through these decisions for more than ten years, across many political cycles and market conditions. The lesson remains consistent. Expansion success is driven by preparation and timing relative to opportunity, not by election calendars.

If your board is evaluating US expansion in 2026, we are happy to provide a practical, risk-focused view based on real operating experience. We will also be attending the SelectUSA Investment Summit in May 2026 and welcome the opportunity to continue the conversation.