In an increasingly volatile economic climate, United Airlines (UAL) recently offered an intriguing glimpse into how businesses are adapting to an unpredictable world. The airline’s second-quarter guidance included a wide-ranging estimate for adjusted earnings per share (EPS), ranging from $3.25 to $4.25 per share. But what set this forecast apart was United’s decision to offer two divergent scenarios: one assuming a “stable environment,” and the other bracing for a potential “recessionary environment.” This dual approach highlights the uncertainty that companies are grappling with as they navigate an evolving global economy.
The Uncertainty of Economic Forecasting
The reason behind United’s unusual guidance is clear: uncertainty. As the company noted in its statement, the prevailing macroeconomic expectations are not as straightforward as they used to be. Historically, companies could often rely on a single consensus view of the economy, but those days are increasingly behind us. Now, organizations are preparing for two vastly different scenarios, dependent on how the U.S. economy fares in the near future.
This “bimodal” outlook reflects the dual possibilities companies see ahead: a relatively stable but weak economy or the onset of a recession. United’s cautious tone mirrors the broader mood of corporate America, where uncertainty is becoming the norm. With fluctuating market conditions, shifting trade policies, and concerns about inflation and recession, businesses are left to navigate a landscape where the future is anything but clear.
Guidance Withdrawal: A Growing Trend
United’s example is not unique. In fact, several other companies have opted to pull back or revise their guidance in the face of economic ambiguity. According to analysts at Bank of America, many firms are becoming increasingly reluctant to offer forecasts in a climate where predictions are fraught with risks. When uncertainty is high, companies may choose to suspend their guidance entirely, reflecting a cautious approach to communication with investors and stakeholders.
While not every business is retreating from giving guidance, the trend is undeniable. A recent FactSet note revealed that of the 23 S&P 500 companies that had reported results as of April 10, 16 had issued guidance. Interestingly, 14 of those companies provided forecasts that extended into the 2025 or 2026 fiscal years, a longer horizon than usual. However, the same report also revealed that two companies—Delta Air Lines (DAL) and Walgreens (WBA)—had either pulled back or refrained from issuing full-year guidance altogether.
Delta, for example, cited the “lack of economic clarity” as the primary reason for withholding its full-year outlook. While it did provide projections for the current quarter, it acknowledged that the wider picture was too uncertain to make definitive predictions. Similarly, Walgreens, which is in the process of being acquired, withdrew its previous guidance as the transaction introduces new complexities that make forecasting difficult.
How Companies Are Adapting
The decision to provide, withhold, or revise guidance is a delicate one for corporations. On one hand, investors and analysts often rely on companies’ outlooks to make informed decisions. On the other hand, providing a forecast in an unpredictable environment can be risky. As Bank of America analysts pointed out, when companies face significant uncertainty, they may choose to simply “shut down guidance” altogether. This strategy, while seemingly cautious, is also a reflection of the reality that forecasting in today’s environment is fraught with challenges.
Even companies that continue to offer guidance are increasingly using wider ranges to account for the uncertainty. By providing two possible outcomes, as United Airlines has done, firms are hedging their bets. This approach not only provides investors with a potential upper and lower bound for earnings but also acknowledges that no one truly knows how the economy will perform in the coming months.
The Toll of Economic Ambiguity on Corporate Strategy
This shift in how companies approach guidance has broader implications for corporate strategy. Businesses may become more conservative in their planning, postponing or scaling back investments in response to the uncertain economic outlook. Hiring plans, capital expenditures, and expansion strategies may all be affected by the lack of clarity on future economic conditions.
Additionally, companies may shift their focus toward more short-term initiatives, prioritizing flexibility and agility. In industries where long-term planning and investment are critical, such as manufacturing or infrastructure, the inability to forecast with any degree of certainty can be especially challenging. Firms may find themselves holding back on major projects or investments, waiting for clearer signs of economic stability before committing to large expenditures.
Looking Ahead: The Need for Caution
As we move further into 2025, it’s clear that economic uncertainty will continue to be a major theme in corporate America. Companies will likely have to grapple with not just the immediate effects of changing trade policies, inflation, and shifting consumer demand but also the longer-term consequences of these disruptions. The challenge will be balancing caution with optimism—ensuring that businesses are prepared for a range of outcomes without sacrificing long-term growth opportunities.
In this new landscape, companies that can effectively manage uncertainty—by being transparent with their stakeholders, adjusting their strategies as needed, and remaining adaptable—will be better positioned to navigate the unpredictable road ahead. Those who can strike the right balance between caution and confidence will likely emerge stronger, regardless of which economic path the country takes.
In the end, while companies may continue to face periods of turbulence and unpredictability, their ability to adjust quickly and plan for multiple scenarios will be key to weathering the storm. For now, it seems that the most prudent strategy for many businesses is to prepare for the unexpected—because in today’s economy, the only certainty is uncertainty.
