Stanford Graduate School of Business (GSB)

Ep76 “How Should You Deal with Uncertainty in Today's World?” With Nick Bloom

The All Else Equal podcast episode features Stanford economist Nick Bloom discussing how to measure economic uncertainty and why the choice of metric matters for businesses and policymakers. Bloom outlines three classic approaches—GDP growth volatility, financial market volatility such as the VIX, and text‑based indices derived from newspaper language. He notes that while the VIX provides a real‑time, forward‑looking gauge of market expectations, it captures mainly short‑term earnings risk and is weighted toward certain sectors. Text‑based measures, built by scraping mentions of “uncertainty” in major outlets, have exploded since the Trump administration, often diverging from both the VIX and traditional surveys. Bloom cites the contrast between a national “Economic Policy Uncertainty” index that jumped dramatically and a parallel index using 2,000 local papers that stayed flat, suggesting media bias influences headline numbers. He also observes that markets react strongly to negative shocks but may ignore long‑run political or geopolitical risks that newspapers flag. The episode’s takeaway for executives is to triangulate across multiple uncertainty gauges rather than rely on a single source. Doing so can improve investment timing, supply‑chain planning, and strategic risk assessments in an era of rapid political and technological change.