What do enterprises think about 2025, following the election? It’s very early to get a complete answer to that, largely because most have been telling me that it would take time for the results to gel. Well, I’ve gotten 84 comments on 2025 by enterprises since the election, and while I’m sure I’ll be revisiting this down the line, the topic is important enough to justify a first look now.
Let me start by making a point, which Is that the enterprise comments I get are dominantly from males, and dominantly from people earning in the upper 15% of the population. The mixture is out of my control because I don’t actively survey, but rather take comments offered spontaneously, and this is the mixture of the sources. It’s important here because this demographic isn’t representative of the political mix we have, so it’s possible this group has a different view than the population at large. That population isn’t making tech decisions, though, so the views of the commenting group may be a better reflection of what companies will do, or think they will do. This isn’t a political commentary, it’s a summary of views offered me. OK? Now let’s get to the comments.
First, 80 of the 84 comments expressed the belief that the political climate for enterprises in 2025 would be more favorable (the dissents came from banking and health care verticals). However, 71 said that they were still concerned about interest rates and/or tariffs, though it was interesting to note that only 22 said they believed that even an attempt would be made to cut taxes (which would raise borrowing pressure) or impose broad tariffs, and only 7 thought it would actually happen.
This, so far at least, hasn’t translated into any changes in forecasts of tech spending; none of the 84 had changed their estimates so far. This wasn’t due to a belief that policy changes would absolutely impact capex, but that there were too many uncertainties on just what policy changes would actually go into law, and what the impact would be. Wait and see, they say.
But how about current thinking? Of our 84, 60 said that the largest factor in determining 2025 capex was profit goals, and that an increase in corporate tax rates would pressure them to cut dividends or stock buybacks, and perhaps to raise prices. Any of that would tend to tighten capital budgets, so this group is cautiously expecting or hoping for some capex relief, and almost all of them said they didn’t expect any negative pressure on capex in 2025.
There is also a general consensus (77 out of 84) that there will be less pressure on enterprises created by regulators. This view is universal among energy companies, automotive, etc. Of the 77, 67 said that this was positive for them, and the remaining ten negative. The latter group was concentrated in areas benefitting from tighter pro-environment policy.
Do enterprises see any other areas where actual change might come along? Yes, and the place they’re watching the most is in network service policy, meaning to them net neutrality and the FCC. As many of you know, the FCC changes hands when the US presidency changes parties, and Republicans have generally not favored the strongest neutrality measures. However, there are already a half-dozen or so states that have enacted their own rules in this area, and so enterprises are not expecting immediate and drastic changes. Instead, they wonder if there might end up being a profound policy divide that might result in different service offerings in different areas of the US.
Regulation of AI and of the stock market itself is expected (by 71 of 84) to be a lighter touch. Of that group, 12 think this raises a risk of a boom-and-bust cycle that would create even more capex uncertainty. About half of those who favor lighter regulation think regulation of their own vertical would be lighter, and beneficial to IT/network capex “in the long run”, while the rest think that less regulation on stock market practices would ease profit pressure, as noted above.
This group of 84 enterprises, of 221 US enterprises, could be described as “cautious” more than “cautiously optimistic”. There are simply a lot of issues to parse, because there are a lot of things that might be done, but not necessarily will be done. I think that this caution will likely prevail through at least the first and possibly second quarter of 2025. It’s possible that actions and conditions will reinforce caution in that period, but unlikely they’ll reduce it. All this means that tangible gains in IT spending are more likely to come in 2H25 than the first half.
What do enterprises fear? The top issue for the 84 was tariffs. While 18 of the group think tariffs would help them, the rest think it would hurt. Retailers fear a rise in consumer prices. Manufacturers generally rely on offshore parts or finished goods that tariffs could make more expensive. Almost every sector believes that tariffs set by the US would likely result in retaliation, meaning a trade war that would hurt exports from the US. There was slight majority (48 versus 36) support for selective tariffs (on China, primarily) but that’s the extent of support for the idea.
The second fear was excessive tax reductions, including the tax on tips and on social security benefits. In all, 77 of the 84 said this risked a major problem with interest rates; even food service firms were mixed in their support of the idea.
War and terrorism was the third fear, held by only 33 of 84. Foreign policy questions are always very difficult for enterprises to address, so while about 40% of enterprises have concerns in this area, I doubt that these will impact capex decisions unless something actually happens in the classic “first 100 days” to raise the risk level.
The first 100 days of any new administration are critical, in terms of what they propose and how much of that they can actually accomplish. In addition, government policy impacts consumer/business demand as well as capex policies overall, and that means that broad economic impacts might influence enterprise revenues, which of course would then impact capex. I suspect that, while I’m likely to get further comments from enterprises through at least 1Q25, I may not get any clarity until closer to the end of the first half.
