Two days after the American bombing hit Tehran, economists at the University of Colorado began surveying more than 200 local business leaders to assess how the economy is faring heading into the next quarter.
Perhaps unsurprisingly, the outlook for the future was negative. But it wasn’t as negative as it was a year ago, when the threat of high tariffs, federal job cuts and a new presidential administration pushed business confidence to its lowest point since the 2020 pandemic.
“Business leaders are showing that they are becoming increasingly accustomed to operating in an environment of uncertainty,” Brian Lewandowski, executive director of business research at the University of California, Leeds School of Business, said at a press conference Wednesday.
According to the Leeds Business Confidence Index, 213 respondents ranked their economic outlook for the second quarter at 41.9 on a scale of 1 to 100 (with 50 considered neutral), up 10 points from a year ago.
“If this was an isolated incident of the war with Iran and we hadn’t talked about tariffs and federal realignment and things like that last year, it probably would have been a much bigger decline. Maybe it wouldn’t have happened,” Lewandowski said. “But right now, the uncertainty is a kind of status quo.”
Federal government data showed the U.S. economy was growing slower than expected at the end of last year. Colorado’s workforce is also shrinking. And if the Bureau of Labor Statistics revise its data in the next month or so, the state’s job growth could reach zero in 2025.
“And we expect continued low growth this year and into 2026,” said Rich Wobekind, senior economist and CU research professor.
Destructive destruction by AI technology
Another concern, or opportunity, for business leaders is that artificial intelligence has become a major potential business disruptor for employees, with 40% of business leaders saying that AI and automation are transforming work and employment.
Most people say they use AI in their work at least monthly, if not every day, and 69% said their productivity has improved slightly or significantly. A further 32% said they have limited or no use of AI in the workplace.
“Such disruptors have existed before, other types like chips and the Internet,” Wobekind said.
But this is a little different, he added. He added that this is because the disruption caused by AI is consistent with changes in immigration policy and other changes that have an impact on slowing job growth, “which is not the model that we have had historically for a long time.”
A number of large companies that have announced layoffs in recent years, including Oracle this week, have tied them to the increased use of AI in the workplace. And while that raises its own concerns for workers and employers, some feel that blaming AI is just an excuse for layoffs due to post-pandemic overemployment.
“What I’m saying is we need to think about the economy differently. We’re not going down a bad path, but when you analyze the economy, employment growth (or GDP growth) may not be everything,” Wobekind said. “Is it more productivity-based? Can we generate enough income from this productivity increase to support society as a whole? I think these are very important questions when you have a small proportion of the working population and a small proportion of people who are paid.”
Coincidentally, CU’s Business Research Department used the AI conversational tool Blendification for the first time in a new report to analyze open-ended survey responses. The Superior-based company uses AI to conduct conversations and better understand what’s behind the responses. Lewandowski said the analysis revealed that the reactions were related to geopolitical risks, noting that “the negative emotional tone significantly outweighed the positive emotional tone.
“When we looked at individual emotional tones, the negative ones were a sense of risk, fear and frustration,” he says. “The positive emotional tone was a tone of trust. Understanding the emotional tone behind the reactions was a different value-add.”
The team is in the process of testing the AI tools and making sure the AI summaries match the responses. So far, blending has not been used to dig deeper into why someone reacted the way they did, Lewandowski said.
“I worry that people will get caught up in conversations with the AI and end up spending more time investigating than expected,” he says. But, he added, “Sometimes when you get a one-word answer, it’s nice to be able to follow up and actually ask someone why.”
