What soaring uncertainty means for the U.S. economy
President Donald Trump's tariff agenda has thrown the financial world for a loop for much of the past month. The on-again, off-again trade escalation with other nations — most notably China — has upended markets with investors fleeing U.S. stocks in search of more stable ground. And as experts and business leaders say the lack of clarity around the tariffs is every bit a challenge as the levies themselves, data shows economic uncertainty is the highest it has been in years.
Economists have a way of quantifying economic chaos, as multiple measures show just how uncertain the market and the economy in general are. One measure, the Economic Policy Uncertainty index from researchers at Stanford and Northwestern universities, uses an analysis of news reports, tax code data and economic forecast disagreement.
According to the EPU index, uncertainty spiked in March to levels last seen during the Covid pandemic.
Kevin L. Kliesen, an economist at the St. Louis Federal Reserve, noted that the change in uncertainty from last spring to this spring is the sharpest such increase in almost 40 years.
'It's a historically unprecedented increase,' Kliesen said.
The instability makes it harder for companies and consumers alike to make decisions, and it can be a scene-setter for recessions. 'Firms will delay investment in response to higher uncertainty,' Kliesen said. 'Consumers facing higher uncertainty about job prospects, they might cut back on spending.'
Menzie Chinn, a professor of public affairs and economics at the University of Wisconsin, said, 'People are maximally confused.'
To show how uncertainty plays out, Chinn gave an example of potential homebuyers: Lowering interest rates might entice them, but worries about a big drop in home prices over the next year — the kind that might arise from a recession — might scare them away.
'It's better news, but washed out by this bad uncertainty,' Chinn said.
The uncertainty extends into the bond market: Government bonds are being sold more than they're being bought — even as stocks sour, flouting historical trends.
Traditionally seen as a safe harbor, bonds tend to be purchased by investors when markets are on edge. That's not the case today, with 10-year Treasury yields surging above 4.5%.
As overall stability is eroding, any news — even if it's inaccurate or positive — has the potential to send things haywire. U.S. stocks soared briefly on April 7 when an errant headline on X said Trump was considering a pause, only to sink when the White House said the claim was false. And while the market took off after Trump dialed down most tariffs Thursday, stocks faltered the next day.
Prominent business leaders have warned about the uncertainty in recent weeks, with both JPMorgan Chase CEO Jamie Dimon and BlackRock CEO Larry Fink saying the lack of clarity is pushing the economy closer to recession.
'We have the strongest economy in the world. It would be good not to add to the uncertainty out there,' Dimon said Wednesday on Fox Business, adding that a recession is now a 'likely outcome.'
This article was originally published on NBCNews.com
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Business owners and family heads should structure continuity plans with updated valuations, clearly defined buy-sell mechanisms, and governance that depends less on future intentions or personalities and more on thoughtful planning. Uncertainty is one of the biggest threats to enterprise value. If business plans aren't baked into legal documents, the business is exposed to potential family disputes, tax inefficiencies and legal ambiguity. Transfers are also easier when numbers have been agreed to in advance. Plan as if you'll leave tomorrow and revisit that plan at least once a year. More families are treating succession planning like an annual checkup. During year-end valuation work, they run liquidation or 'liquidity fire-drill' scenarios to spot issues and test their transition plans. Some are also using structures to manage control and distributions effectively across family members more dynamically. Like outdated software, if a succession plan isn't reviewed and updated regularly, it's more likely to break when you need it most. Driskell: Business owners face unique risks and opportunities in estate planning. Key considerations include ensuring continuity of control, managing valuation and liquidity issues, and minimizing transfer tax liability. Proper use of buy-sell agreements, voting and non-voting share structures, and family-limited partnerships helps preserve operations while transferring economic value. Owners should explore gifting or selling interests to irrevocable trusts while leveraging valuation discounts. Planning for management succession is equally vital – aligning legal structure with leadership readiness. Owners often underestimate the need to separate governance from ownership. Coordinating business succession with estate liquidity planning (via insurance or redemption strategies) ensures family and business stability. Q: What defensive investment strategies are you recommending in light of the geopolitical instability and trade disputes? Ben-Naim: We consistently review our clients' allocations and advise on defensive strategies that can help ensure a buttoned-up portfolio. These strategies can range from diversifying asset classes to withstand major public market fluctuations, tax incentive investing and hedging. When considering geopolitical instability, our diversification philosophy is much the same. Now is an opportunity to really consider your geographic exposures and to look to consistently performing and emerging markets outside of the U.S. to realize opportunities. Of course, not all markets are winners and investing in a new region requires vetting, oftentimes with boots on the ground. But with careful research, you can make intelligent entry points. For example, despite the war, Israel proved to have a very strong public market in the past 18 months. Other markets, including India and Vietnam, are expected to perform with higher GDP growth compared to the U.S. and present an exciting outlook. Q: How do you see AI and automation impacting wealth management in the next 5-10 years? Pujol: AI is beginning to reshape wealth management, but it's not a replacement for advisors, it's another tool in the toolbox. Used well, it can accelerate diligence, surface outliers, stress test assumptions and generate models in seconds. But the truth is clients don't need more spreadsheets; they need clarity, context and judgment. All this comes from the human touch and experience. The advisors who will lead in the next decade are those who treat AI like an enhancement of their own skills, not like a replacement. At Objective, we use AI to flag inconsistencies, improve our communication and stress test our thinking. Then we bring in the human element to synthesize, challenge and advise. AI can compute outcomes, but it's useless without an experienced human interpreter. In the end, it's not about replacing insight, it's about removing noise so advisors can focus on the decisions that actually matter. AI enhances great advisors, but it will never make poor ones great. Watson: AI and automation are set to significantly impact wealth management in the next 5-10 years, likely accelerating the commoditization of basic advisory services. As technology advances, routine tasks such as portfolio rebalancing, tax optimization and risk assessment will become increasingly automated, making them more accessible and efficient at a lower cost. This will force traditional wealth advisors to rethink their value proposition, as many investment-related services will be handled by AI-driven platforms. To remain competitive, advisors will need to expand their offerings beyond just investments, focusing more on personalized financial planning, estate and tax strategies, and holistic wealth management. By integrating AI and automation into their practice, wealth managers can enhance their operational efficiency, but to truly differentiate themselves, they will need to provide high-touch, value-added services that help clients navigate complex financial decisions and life transitions. Q: How can advisors better engage younger generations in the wealth transfer conversation to avoid conflict and ensure legacy continuity? Pujol: If you want heirs to act like stewards instead of recipients, don't just write a will, start a conversation. The earlier families involve younger generations, the more likely wealth becomes a tool for continuity. 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Rather than treating wealth as a taboo or distant topic, advisors should encourage clients to involve heirs in strategic conversations about family values, financial goals and the purpose behind the wealth. This helps build trust, reduce the risk of conflict and ensures that the next generation feels informed and empowered rather than surprised or unprepared. Advisors can also offer educational resources and facilitate family meetings to bridge knowledge gaps and align expectations. By acting as neutral facilitators and emphasizing transparency, advisors play a key role in preserving both family harmony and the long-term continuity of the legacy. Q: For those concerned that their heirs might abuse their inheritance, what trust strategies are there? Driskell: Discretionary trusts with independent trustees remain a powerful tool to prevent misuse of inherited wealth. These trusts allow the trustee to make distributions based on the beneficiary's needs rather than mandatory rights. Incentive provisions can be included to reward education, employment or sobriety. Spendthrift clauses protect trust assets from creditors and poor financial decisions. Advisors may recommend staggered distributions or milestone triggers to gradually release funds. For families with ongoing concerns, directed trusts or trust protectors can provide oversight and flexibility. Ultimately, thoughtful drafting and selecting a fiduciary who understands family dynamics are key to protecting both wealth and relationships. Q: As a trusted advisor, what advice can you share for longer-term portfolio asset allocation? Ben-Naim: Now more than ever, high-net-worth investors have access to more asset classes, opportunities and strategies. While this is exciting, it's important to understand the implications of your holdings and to allocate your portfolio in a way that will withstand external fluctuations. It can be nearly impossible to understand the implications of your full portfolio holdings and how they may fluctuate throughout a market cycle or in response to a macroeconomic, geopolitical or industry event. I strongly recommend working with an advisor with a fiduciary responsible to you and your best interests, as well as intimate working knowledge of your profile, family, businesses and interests in order to create the right plan. The right financial advisor will not only know and understand you and your allocations but will also prioritize consultancy and communication to ensure holistic success.
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