How Macroeconomic Uncertainty Is Squeezing Profits and Wrecking Targets

Business uncertainty is shifting in unexpected ways. Goods-producing firms now face higher uncertainty than service companies, reversing a pattern from just a year ago. The change is especially sharp in manufacturing, construction and building materials, where nearly half of executives report high uncertainty. For firms with global supply chains, the pressure is even more intense. Companies that source 40% or more of their suppliers internationally are about twice as likely to operate under high uncertainty as those that source domestically. This uncertainty comes with real costs. High-uncertainty firms report profit margins that are three times weaker than their peers and estimate that uncertainty costs them 6% of revenue. These five data points reveal how uncertainty has become concentrated in specific sectors and what it means for business performance in 2025.

The Effects of Uncertainty

Goods Shift

Uncertainty has moved decisively toward goods-producing companies. In 2025, 28% of goods firms report high uncertainty, up from 22% a year earlier. Service companies moved in the opposite direction, dropping from 34% to 25%. The shift is most dramatic in sectors of goods production, such as construction, building materials, and manufacturing. In these sectors, high uncertainty more than doubled from 13% to 32% year over year. By late 2025, uncertainty among goods producers reached 157% of the 2024 average, the highest level in the data series.

Production Pressure

Manufacturing and construction firms bear the heaviest burden of uncertainty. Among construction and building materials companies, 44% report high uncertainty. Manufacturing is close behind at 39%. These levels are more than triple what they were in 2024. In contrast, other segments of the goods economy show more modest increases or outright declines. Trade and distribution firms, for instance, saw high uncertainty drop from 35% to 27%. The concentration in production-heavy industries points to a specific source of pressure.

Global Exposure

Companies with international supply chains face dramatically higher uncertainty. Firms that source 40% or more of their suppliers globally report high uncertainty at a rate of 33%. That compares to just 18% among companies with purely domestic supply chains. The relationship strengthens when confidence in managing tariffs is low. More than half of executives who say they are only slightly confident or not at all confident in adapting to tariff disruptions report high uncertainty.

Profit Erosion

High business uncertainty translates directly into weaker profits. Half of high-uncertainty firms report diminished profit margins, double the share among low-uncertainty peers at 25%. The gap widens when measuring the total financial impact. High-uncertainty executives estimate that uncertainty costs them 6% of revenue on average. That compares to 3% for medium-uncertainty firms and just 2% for low-uncertainty companies. Three times the cost. The margin pressure shows up across customer issues as well.

Performance Gap

By year’s end, high-uncertainty firms fell far short of expectations. More than 80% missed their 2025 performance targets. Among low-uncertainty companies, only 28% fell short. The gap extends to cash flow and margins. Three-quarters of high-uncertainty firms report weak cash positions, compared to less than 15% of other companies. Operating margins tell the same story. Three out of four high-uncertainty firms saw margins decline in 2025, more than six times the rate among low-uncertainty peers at 12%. Looking ahead to 2026, only 24% of high-uncertainty firms expect revenue growth, while nearly all low-uncertainty companies do.