Economic Anxiety Theater: A Leader's Guide to the Coming Downturn
When you're stressed too, but still need to steer the ship
Here I am, financially secure after decades of hard work, and I still wake up at 3am wondering if the economic sky is falling. If I'm stressed, imagine what's happening with your team.
The 2025 Recession is moving from vibes to reality quickly. The stock market is doing its best impression of a toddler on a sugar crash, consumer confidence took a header again this week, and layoffs are spreading beyond Federal workers. Not exactly the backdrop for peak productivity.
I've seen this movie five times already. Gulf War recession? Check. Dotcom bust? Yep, laying off more people than I hired. 2008 financial crisis? Navigated without cuts. 2013? Had to lay myself off. 2023? Got laid off right after laying others off. Oscar-worthy economic drama, every time.
Your Team's Worry Playlist
Some leaders see economic anxiety as "leverage." The recession playbook goes something like: "They should be grateful to have jobs! Let's crack the whip!"
But stressed out employees aren’t productive. A recent American Journal of Preventive Medicine study shows that employee burnout costs $4k to $21k per worker per year. 90% of the cost driven by presenteeism: reduced productivity through disengagement. AKA showing up to check the box.
I don't have a crystal ball for what's coming, and honestly, anyone who claims they do is selling something. But I do know this: how you lead through uncertainty matters more than your perfect forecast.
Four Moves Smart Leaders Make Now
As I wrote about resilience, you need to be a positive realist: Don't sugarcoat challenges or paint unrealistic pictures; enlist your team in charting the path forward.
1. Get Uncomfortably Real. Transparency isn't just nice, it's necessary. Wharton's Peter Cappelli nails it: "Tell them what you know. If you don't, they'll make it up, and the stories they'll make up are always worse than reality.
In the dotcom implosion, I learned the value of transparency. If the numbers aren’t good, the last thing you want to do is ignore reality. You hire smart people: they get when trouble is brewing. They don't need protection from reality—they need to be facing it together.
2. Budget Like Your Business Depends On It (Because It Does). Decide now what's discretionary and what's essential. What specific triggers will force harder decisions? Cutting long-term investments feels terrible, but sometimes you're preserving the team and capabilities needed to accelerate out of the downturn. Better to plan deliberately than panic later.
3. Ruthlessly Prioritize. Employee engagement was already scraping 10-year lows before 2025 became the year of chaos. Before you trot out "do more with less" (the corporate equivalent of "let’s burn you out more"), get crystal clear on this month's must-win priorities. What specific results will best position you for survival? Give people focus and permission to say "no" to everything else.
4. Address the Elephant in the Room. Your team members with mortgages, student loans, and dependents are doing recession math in their heads during every meeting. Small gestures matter—financial planning resources, flexible work options when possible, and public recognition cost almost nothing but deliver returns on morale.
The Layoff Question
Layoffs should be your last resort, not your opening move. Research consistently shows they rarely improve financial performance, but they definitely torpedo engagement, institutional knowledge, and productivity.
I've been on both sides of this equation. At one startup where finances went sideways, our first round of cuts wasn't deep enough—prolonging the pain with multiple rounds. Later, I led a full restructuring (including my own exit) to give the company a fighting chance at a future.
The Bottom Line
Economic cycles are inevitable. Your response to them isn't. The leaders who emerge strongest aren't the ones who had perfect foresight—they're the ones whose teams trusted them enough to run through walls when it mattered.
Your people don't expect you to predict the future. They just need to know you're facing it together, eyes wide open, with a plan that acknowledges both business realities and human needs. That's not just good leadership—it's the difference between a team that weathers the storm and one that gets washed away by it.
What positive traits have you seen in the best leaders during challenging times?
Additional related reading:
Jacob Clemente and Kevin Delaney in Charter: What to do now about the Trump tariff shock
Xochitl Gonzalez in The Atlantic: What the Comfort Class Doesn’t Get: People with generational wealth control a society that they don’t understand
My Work Forward column: Resilience: “Tough It Out” Isn’t Going to Work
ICYMI
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These are definitely some scary uncertain times that's for sure Brian.