If we look at how well we think we understand global economic policy on a scale between “I have a pretty good idea of what’s going on” and “wow, I’m completely flummoxed”, we humans at this very moment are at an all-time-high on the uncertainty index. The previous high was during Covid. Things got pretty foggy during Brexit. We were a little confused toward the beginning and the end of the Great Recession, though in the middle of the three year ordeal we knew it was bad and there was no room for wonder. Prior to that, the bursting of the .com bubble caused some generalized angst.
But for the last few years our collective anxiety level over what the future holds and how we will adapt to it has elevated such that the previous high spikes during months of confusion have now become the “I think I’ve got a handle on this” confidence baseline. Is it the media barrage that’s caused our eyes to glaze over? Has the abundance of information available at our fingertips made us shrug our shoulders when faced with a decision? Is it the proliferation of so called experts in any given field that makes our head spin? Yeah, it’s probably all of that. We’re better informed but more clueless than ever,
The consequential implications of this shared bewilderment remain to be seen. But historically, an ambiguous economic outlook leads people to hunker down and make more judicious decisions with their lives. In the investing world it’s called a “flight to quality” or a “risk-off trade” involving money flowing from the stock market and into the bond market, resulting in stock prices dropping and interest rates moving lower. Please don’t use my perceptions as a trading tip and realign your entire 401(K). But it is worth noting that the tables may start to turn in the near term as our brains seek to unravel the mess before us.
