How to Navigate Economic Uncertainty in 2025 With Confidence

Since Donald Trump’s inauguration in mid-January, the nation has been swept up in a whirlwind of executive actions: the elimination of thousands of federal jobs, the removal of USAID programs, mass deportations, rising tariffs, volatile markets, and escalating trade tensions. The news cycle has hardly had time for a commercial break, and anxiety-inducing headlines seem to be the norm.

No matter your political stance, one thing is clear: unpredictability had become the new normal. The administration’s fast-moving style, which echoes Silicon Valley’s ‘move fast and break things’ ethos, has left many Americans struggling to keep up and wondering what the future holds.

It’s only natural to feel uncertain amidst so much change. The good news? There are things you can do to help reduce anxiety and navigate economic turbulence with more confidence.

Key Findings

American consumer confidence dropped significantly in March, with a sharp decline in the Expectations Index, signaling increasing concerns about personal finances, unemployment, and inflation.

Economic uncertainty is being fueled by shifting government policies, rising tariffs, global supply disruptions, and constant media coverage of volatile markets and trade tensions.

High volatility is impacting both businesses and consumers, as unpredictable events and mixed signals from economic indicators leave many unsure about future outcomes.

To manage uncertainty, investors can take practical steps such as diversification, increasing cash reserves, and tax-loss harvesting to stay on track.

Consulting a financial advisor is key during uncertain times. They can help recession-test your plan and ensure its resilience against economic turbulence.

If recent headlines have you feeling uneasy, call your financial advisor. Sharing how you feel is the first step toward staying grounded and making thoughtful decisions.

How Are Consumers Feeling About the Economy in 2025?

Recent data shows that U.S. consumer confidence has taken a notable downturn.

The Expectations Index (part of the Consumer Confidence Index published by The Conference Board) tracks how Americans feel about their short-term income, business, and employment outlook. In early April, the Index fell to its lowest level in over a decade: 57.0, down from 64.7 a month earlier and 79.4 the previous year.

While historically an Expectations Index below 80 has been associated with a higher probability of recession, it’s worth nothing that this isn’t a universally accepted predictor. Some analysts argue the exact opposite – that low consumer confidence often precedes strong market rallies, as investors look beyond short-term sentiment and focus on the fundamental principles of the market.

And right now, many Americans are clearly feeling wary. Concerns about rising costs, job market uncertainty, and headlines about economic volatility have many households tightening their budgets and pulling back on discretionary purchases.

It’s important to remember that a dip in consumer confidence doesn’t mean it’s time to panic. Emotions may drive short-term behavior, but they don’t dictate long-term outcomes. If you feel caught up in a whirlwind of market volatility and noisy headlines, the best way to weather the storm is to stay grounded by sticking to your long-term financial plan.

Last year, WestStar Financial Advisor Serge Suleimani wrote a helpful guide on how to reduce the emotional impact of uncertainty on investing, which is worth a read in today’s turbulent market.

Risk vs. Uncertainty: What’s the Difference?

In the world of economics and investing, risk and uncertainty are often mentioned in the same breath, but they’re not the same thing.

Risk refers to situations where outcomes are known, and probabilities can be assigned.

Uncertainty exists when outcomes and probabilities are unknown or unreliable.

Understanding the difference matters. Risk can be modeled, managed, and mitigated. It’s what financial plans are designed to address. But uncertainty is harder to prepare for – and that is what can make it so unsettling, especially in a rapidly changing environment.

Take retail giant Walmart as a case study: During a Feb. 27^th address at the Economic Club of Chicago, Walmart CEO Doug McMillon discussed a noticeable shift in consumer behavior. He described how, as economic anxiety rises, Walmart is seeing more “budget-pressured customers… showing stressed behaviors.” Just days after, the company issued a full-year earnings forecast that fell below Wall Street expectations.

And it’s not just Walmart – many other businesses are affected by the broader sense of not knowing what might come next. Jay Schottenstein, CEO of American Eagle Outfitters, captured it well when he said:

This illustrates the heart of uncertainty: it isn’t just theoretical, it’s emotional. It shapes how consumers spend, how businesses forecast, and how policymakers react – and leaves many Americans today with the lingering question of “How will it all pan out for me?”

What’s Causing Economic Uncertainty in 2025?

Economic uncertainty arises when the future economic environment is difficult to predict, and decisions must be made without full confidence in the outcome. There are a wide number of interconnected factors which contribute to this sense of unpredictability, such as:

It’s a natural response to try and clear the fog by gathering information, but many times, those who wade out on their own just end up feeling more lost in a vast sea of:

Missing information. Decision-makers often lack access to critical economic data or clarity on fiscal direction, making it more difficult to make well-informed choices.

Unreliable information. The rise of misinformation, disinformation, and conflicting narratives across both mainstream and social media has made it harder to trust what we hear, see, or read.

Conflicting information. Consumers and businesses alike receive mixed signals, making it difficult to interpret the broader economic picture and plan for what’s coming next.

Noisy information. The 24/7 news cycle and rapid amplification on social media creates a flood of information that can be overwhelming and difficult to navigate.

Confusing information. When economic decisions are not clearly explained, or the rationale is vague or overly complex, public confidence erodes, leaving people uncertain about how to respond.

All together, these factors and more form the thick fog that can make economic decision-making so difficult. The more uncertainty there is, the harder it becomes to act with confidence. That’s why, if you’re feeling uncertain about the economy or your financial future, it’s so important to talk to your financial advisor – they can provide a well-informed light for you to navigate by.

How Do You Plan When Economic Uncertainty Becomes the Norm?

Unpredictability isn’t just inconvenient – it poses a huge problem to anyone trying to run a business, plan their future, or simply maintain financial stability. After all, planning is the basis for a successful life.

Having a plan gives us structure and direction and helps us make confident decisions. When the future is uncertain, people often become reactive instead of strategic, which can lead to financial stagnation or poor decision-making. The real challenge in times of uncertainty lies in how quickly and significantly it can shake up global markets, currencies, and international relationships – making emotional discipline a key part of weathering the storm.

Smart Moves in a Volatile Market

To stay on track when navigating market turbulence – and even potentially take advantage of the environment – remember these strategies:

Increase Your Investment Contributions. If you have the funds available to invest, market drawdowns can be an advantageous time to increase your regular contributions, as share prices will often be lower. However, always consult your financial advisor before making any decisions.

Avoid Making Withdrawals. It’s easy to be tempted to make withdrawals or take distributions during a market dip, but doing so may turn a temporary loss into a permanent one. Be sure to discuss the decision with your financial advisor to make sure you’re aware of the impacts and alternatives.

Take Advantage of Tax-Loss Harvesting. If it’s applicable to your situation, tax-loss harvesting is one way to reduce the sting of an investment loss. When executed properly, it can allow you to manage and reduce your tax burden by selling investments at a loss to offset the taxes owed on capital gains from other investments. Again, your financial advisor can identify tax harvesting opportunities that may benefit you.

Be Patient. Patience is one of the most important virtues when it comes to successful long-term investing. Market downturns and recessions are a natural part of the economic cycle, and during such times, it’s helpful to focus on what you can control – such as how much you save and how you plan for the future.

At WestStar, We’re Here to Help You Stay Focused & On Course

No matter how turbulent the market becomes, we’re always here to help you stay grounded and forward-looking. We’ll work with you to navigate volatile markets, help you ‘recession-test’ your strategy and portfolio, and keep you on track toward achieving your financial goals, ensuring you’re best prepared for any market shifts that may come your way.

We understand that this article may leave you with questions or concerns. If so, please don’t hesitate to reach out – we are a resource you can always lean on, whether you’re worried about the economy or want to discuss your financial approach.

Your trust and confidence in us are at the very core of what we do. We’re honored to be your partners on the path to prosperity, no matter what the times look like, and look forward to the opportunity to connect.

• Sam Gullette & Erik Alexander