What Business Leaders Can Learn From an Economist’s View of Uncertainty
As CEO confidence reaches a five-year low and consumer spending remains uncertain heading into the U.S. holiday season, everyone from small business owners to the Fortune 500 is left feeling the weight of economic uncertainty.
In this environment, where headlines can feel overwhelming—even contradictory—leaders at every level are left wondering: What should I be doing right now to protect and strengthen my business’s value amid so much uncertainty and unpredictability?
Seeking answers to this question, Michigan Ross Executive Education turned to renowned economist and University of Michigan Professor of Public Policy and Economics Justin Wolfers. During a live conversation with Bloomberg correspondent Stacey Vanek Smith, Wolfers first addressed the question from the perspective of a Fortune 500 CEO and didn’t hesitate: He’d start investing—not in more analysts or AI tools—but in political insight.
“A typical Wall Street firm has a whole bunch of [people] who are very, very good at numbers…they’re chock full of economics PhDs and indeed math and physics PhDs as well,” he explained. “How many political science PhDs are inside a typical investment house? Probably far fewer—somewhere between zero and two.”
For large organizations, Wolfers argued, understanding the political landscape may matter more than tracking economic trends. “If you think about the things that are going to determine the value of your firm,” he continued, “whether Pfizer this morning has an agreement with the White House about the pricing of their drugs—that’s way more important to [the company’s] future than any number of conversations about the Fed.”
Justin Wolfers and Stacey Vanek Smith live from the Michigan Ross Digital Education Studio
He extended the idea to other industries: “Whether automakers get access to rare earth minerals is way more important than any of the usual economic story.” For CEOs, he says that means focusing less on forecasting the S&P 500 and more on “forecasting Congress and the Supreme Court.”
For Small Business Owners: Compete Smarter, Not Bigger
When asked how his advice might differ for small business owners who can’t hire lobbyists or political economists, Wolfers offered a different kind of reassurance.
“The good news for a small business is that most small businesses are competing against other small businesses,” he said. “Yes, you’re in turbulent waters, but so are they. And so at some profound level, the race hasn’t changed.”
Vanek Smith illustrated his point with a simple metaphor: “You don’t have to outrun the bear—you just have to outrun the other people.”
In other words, while small business owners can’t control the broader economy, they can control how quickly they adapt. Using an example of a florist, Wolfers commented, “You’ve now got the capacity to be a little smarter than the other florists. If you happen to have been the smartest florist in town, actually, this is your moment to shine. You can be more adaptable. You can look harder at your supply chain and think harder about pricing. You can think harder about new business models.”
AI and the Next Wave of Change
Before closing, Wolfers reminded listeners that business leaders of every size are also facing something larger than market or political turbulence. “We are at an extraordinary moment, technologically,” he said. “Everything we know is about to change.”
He reflected on the duality of his own excitement and fear surrounding AI, also noting, “For the flower seller, and anyone else who's doing business, the ability to think creatively about new uses of these technologies, I think we're in the moment where now it's time to shine.”
The full conversation between Justin Wolfers and Stacey Vanek Smith is available to watch below.
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