Manage equity without headaches. Running a company is a complex skill. Managing your cap table shouldn’t make it harder. Growing companies use Pulley to simplify equity management from fundraise modeling to tender offers. Master running your business with help from Pulley.
In this world, nothing is certain except death and taxes—aaaaand uncertainty in the economic landscape in 2025.
A late May Bloomberg analysis of earnings calls and other events found the words “uncertain,” “uncertainty,” and “uncertainties” were used 3,100 times since the start of April. To put it in perspective: That’s more than at the height of the 2008 financial crisis and the start of the pandemic in 2020. Cool, cool, cool.
We’re in the kind of era where you might find yourself Googling “crystal ball economy” or asking ChatGPT “why, oh why???” Good luck getting answers to those questions.
But if the question is about how CFOs can more effectively navigate an undoubtedly uncertain economic environment, well, we’re in much better shape there, thanks to Laura Jackson Young, an economics professor at Bentley University and frequent visiting scholar to the Federal Reserve Bank of St. Louis.
The main takeaway from her findings isn’t a shocker for anyone who’s opened their inbox or looked at even a single headline in the last few months.
“Anybody who’s really studying this topic, you’re finding that lots of uncertainty is bad for economic conditions,” Young said.
What to do about it, though?
Riskiest business. There’s a reason uncertainty feels so uniquely daunting: It’s ever-so-slightly different than risk, though it’s a form of risk. By comparison, risk is easy. You know risk. Being able to place probabilities on different outcomes, and using those probabilities to price assets, make decisions, and determine forecasts? That’s bread and butter over here.
Uncertainty, of course, is all about not knowing the likelihood of different outcomes, Young points out, and that’s precisely what makes it so difficult to tackle for financial leaders.
“What are the chances that the economy slips into a recession? What are the chances, if you’re an individual, in a household, how likely is it that I’ll have a job next year? I really don’t know,” she explained. “And so when we have that level of uncertainty, we get a lot more cautious, and a lot more reluctant to take on any big expenditures, to make really any impactful decisions that are difficult to reverse because we just don’t know the different scenario[s].”
But uncertainty isn’t totally nebulous. That is, uncertainty can be measured, for academic purposes. In Young’s studies, she’s used hard measurements like the volatility of stock markets as well as analyzed news coverage (cough cough) to see just how prevalent uncertainty is in the public consciousness at a given time.
Right now, obviously, uncertainty is everywhere. In addition to popping up on seemingly every earnings call, there’s also the Federal Reserve’s Beige Book from early June, in which the central bank used the word “uncertainty” 76 times. (Most recently, when the Federal Reserve said it was keeping rates steady, the Federal Open Market Committee said “uncertainty about the economic outlook has diminished but remains elevated.”)
In short, we’re in the kind of time when uncertainty shocks, or large increases in uncertainty in the economy become even more pronounced, since everyone’s hyper-aware of uncertainty, Young noted.
“It’s this concept of rational inattention: When it’s not a big deal, we don’t pay attention. It doesn’t affect our day-to-day that much,” Young explained. “But then, when things do get really volatile, or when things are really unclear, and there’s a lot of big shocks happening, then we start to pay attention. And then when we do have a shock, it has a much bigger effect, and so it’s kind of amplified.”
Making lemonade out of uncertainty. To that end, step one is really just information gathering.
“We’re seeing kind of this weird dichotomy between, I call it soft and hard data, as other folks do,” she noted. Right now, Young says there’s a difference between “the hard data of actual consumer spending, or actual unemployment numbers, versus the soft data, which are those confidence indicators or sentiment surveys and stuff like that, where the soft measures [show] that people are getting really, really nervous, and that might be a leading indicator saying, ‘Okay, in the near future, that’s probably going to impact the hard data that we’ll see people really start changing their behavior.’”
That’s where Young recommends focusing attention: How exposed is your specific consumer base to “holding back in terms of their engagement with the market” because “they just have no idea where they’ll be next year?”
One other key for CFOs to remember? Uncertainty doesn’t last forever—but its impacts could be long-lasting.
“The uncertainty part itself, that can be fairly short-lived,” Young noted, adding that it’s particularly true for the persistently headline-grabbing trade policy uncertainty we’ve seen thus far in 2025. “The uncertainty piece alone, if you could isolate that, that’s probably short-lived as we get some more information [and] start to figure things out, but whatever lasting impact from the policy itself, or lasting impact from market restructuring, or reputational impact of these policies, whatever the real effect is there, that could be more long-lived.”