Navigating a volatile, uncertain and chaotic economy calls for a different approach

Navigating a volatile, uncertain and chaotic economy calls for a different approach

“It’s difficult to make predictions, especially about the future.” That quote, attributed to both a physicist (Niels Bohr) and a baseball player (Yogi Berra), sums it up. Ingrained in our psyche is the never-yielding compulsion to predict the future.

This is especially true in economic forecasting.

The problem is, we’re getting worse at it. It isn’t faulty mathematical models or econometric techniques. Rather, the problem is the growing number of things that hit us from out of the blue – the so-called “black swan” events that are, by definition, unpredictable. There’s no better example than the tariff tantrums that have upended every economic forecasting effort.

Relying on forecasts can lull us into a dangerous false confidence. When consumers and business leaders are making decisions based on the predictions of economists – and when those forecasts turn out to be wrong – it creates problems.

Economists don’t have crystal balls, but we do have lava lamps. We can make observations, but the situation is fluid and constantly shifting. Rather than predicting the economy, we’d serve ourselves and our businesses better by preparing for any possible outcome.

Here are four tools to help anyone – business leaders, politicians and everyday citizens – prepare for events that are certain to disrupt the economy.

• Know who you are. Strangely, many businesses can’t answer this. They may trot out mission statements or corporate values – and these are important. But they’re not a description of who they are as a company. What’s their core story? What do they do? Do they really just produce widgets? Or is it something more – something deeper. (The story of Domino’s Pizza is relevant here: they thought they were a pizza company. But they were really a technology and convenience company). Knowing who you are as a company will provide deep roots and resilience when your economic plans are disrupted.

• Build relationships. Research conducted on successfully navigating sudden change reveals that strong relationships are essential. Relationships with team members, with your senior leaders, with your clients, and even with your competitors make an enormous difference. In times of challenge and disruption, we need to tie our life rafts together.

• Prepare for the unexpected. This is where heavy reliance on forecasting can be a stumbling block. Don’t throw out the forecast, but treat it as only one possible scenario. Plan for that. But also plan for the series of unexpected events. What’s your plan if a natural disaster wipes out a facility? What happens if your supply chain from a foreign country is suddenly severed? What happens if tariffs are imposed that suddenly make your industry untenable? Thinking hard about these scenarios will sharpen your ability to react quickly.

• Show up. In our personal and professional lives, there are always tasks and obligations that don’t match our natural talents. We don’t need to excel at everything, but it is important we at least show up and try our best in times of disruption. Show up for your team, your bosses, your boards of directors. Show up for yourselves through attention to your mental and physical wellness. Be kind.

Heading into the fall of 2025, the anxiety is palpable. Wars are raging. Inflation has been tamed but living costs remain high. Tariffs remain completely unpredictable. Weather events are extreme and getting worse. We can’t control any of these events, but we can prepare for them. Equipped with these tools, we can navigate through all disruptions that come our way.