Uncertainty in the U.S. economy is at an all-time high as tariff and other macroeconomic conditions have the public and economic forecasters doubting future economic growth.
Economic policy uncertainty landed at 715.59 in April, up 413.3% year over year, according to the monthly U.S. Economic Policy Uncertainty Index created by the Policy Uncertainty project, a team of U.S. financial researchers.
The January-June 2025 average measures 432, up 236.4% since January-June 1900 when the index began, and the highest the index has ever been, Chicago Federal Reserve Bank economist Martin Lavelle said at Equipment Finance Connect 2025 last week in Nashville, Tenn.
“The level of uncertainty in this index is higher than even when it was during the Great Depression, during the great financial crisis and during COVID,” he said. “That speaks to the level of uncertainty.”
The policy-related economic uncertainty index is based on three components: the volume of relevant coverage from 10 major U.S. newspapers, the number of temporary federal tax code provisions expiring and the level of disagreement among professional economic forecasters, according to the index website. Together, these components provide a comprehensive measure of the lack of certainty surrounding U.S. and global economic policy.
Navigating the bigger uncertainty picture
Meanwhile, the monthly global economic policy uncertainty index measured 548.89 in March, up 173.8% YoY. The combination of U.S. concern and global concern represents a problem for equipment dealers, lenders and manufacturers as everyone continues to navigate supply and demand pressures that still haven’t normalized since the pandemic.
Vehicle, trucks and heavy equipment manufacturers must develop long-term strategies, planning programs four to eight years or more in advance, so the current lack of certainty represents a planning problem, Lavelle said.
“Before you make any decision, you want to know if that return on investment is going to be there for you four, six or eight years from now, so you’d like to have some certainty,” he said. “Whatever action is taken, whether it’s beneficial, whether it’s detrimental, if it’s going to be there, you can plan for it.”
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