The Price of Uncertainty: How Economic Anxiety Chokes Spending and Triggers Recession

After two years of laboring over the landscaping of their acre-and-a-half property in Cold Spring, N.Y., Renata Kero and her husband were finally ready to pay a few thousand dollars for professional help. But as economic instability mounted, they slammed the brakes on the plan.
“The news feels like the Wild West lately,” says Kero, a 45-year-old freelance journalist and mother of one. “Every day brings a new twist. We don’t know what’s coming next.”
Their story is becoming the norm. Across the country, American families and businesses are pausing or cutting back on spending—not necessarily because they can’t afford to, but because they don’t know if they’ll be able to tomorrow. It’s this collective hesitation, driven by whiplash-inducing policy changes, volatile trade moves, and a turbulent stock market, that economists say can tip the economy into a recession.
Consumer confidence is plummeting, according to the University of Michigan’s Survey of Consumers, which reports a more than 30% drop since November. January marked the first dip in consumer spending in two years. For families like the Keros, that means no yard help, no new phone, and definitely no summer vacation.
Businesses are just as wary. Airlines like Delta are projecting revenue drops due to what CEO Ed Bastian called “broad economic uncertainty around global trade.” FedEx has already slashed its revenue forecasts. Warner Bros. Discovery is reportedly halting all non-essential travel.
And while the National Federation of Independent Businesses (NFIB) noted a dip in small-business optimism in March, the real kicker is that their uncertainty index remained high. “Uncertainty makes it hard for business owners to plan,” said NFIB chief economist Bill Dunkelberg. “So they stop making big moves.”
It’s not just a hunch—it’s proven economic behavior. Bentley University professor Laura Jackson Young explains that in high-uncertainty environments, even small policy changes have outsized psychological effects. “When things are already unstable, people get hypersensitive to anything that might shake things up further,” she says.
This is the dilemma facing entrepreneurs like TJ Semanchin, co-founder of Wonderstate Coffee in Wisconsin. Earlier this year, Semanchin was riding high, having just won a major industry award and aiming to scale his business with major partners like Whole Foods.
Then came threats of massive tariffs on imported coffee beans, which would spike his costs by $20,000 per container. Even though those tariffs were paused, the damage was done. “We’re not making any big purchases right now,” he says. “We’re taking a defensive stance until things stabilize.”
Defensive stances, multiplied across households and companies, are what pull the economy backward. That’s how recessions begin—not just with losses, but with fear of them.
Kero and her husband are embodying that fear. “We’re going to suffer through the yard work again,” she says. “And we’re saving every penny we can. Who knows what’s coming next?”