To be fair, I’ve had a number of friends over the years who were economists. They were all very smart people, and I truly enjoyed getting their views about the financial world.

But like President Harry Truman, I almost always came away from these conversations with more unanswered questions than I started with.

The fact is that economics is part science/part art — and requires dealing with multiple variables that have far-reaching impacts.

Such is the case these days, with a whole range of issues, including inflation, trade and geopolitical risk to name a few.

Here’s a look at some of these:

Global inflation has slowed significantly over the past couple of years. But falling inflation has been uneven around the world, with much of the developed world nearing recession while the United States has seen lower inflation along with accelerating growth and full employment.

Despite market expectations for more interest rate cuts, the Federal Reserve seems poised to hold rates steady, given strong economic growth and low unemployment that make more rate cuts seem unnecessary — and risky if inflation returns.

Growing deficits suggest that we will likely see higher rates for longer — a clear change from the past many years of low (even near-zero) rates.

The base case presented by most economists is for U.S. economic resilience to continue in 2025.

But economies outside the United States have been far less lucky, unable to get the great combination of solid growth with reduced inflation, so we may see further interest rate cuts in Europe.

And China faces strong headwinds with a true crisis in its real estate sector and weak consumer confidence, so expect more monetary and fiscal support coming soon.

For the United States, the potential impacts of pending immigration policies could be dramatic.

Without being political, the fact is that immigrants to our county — both legal and illegal — meet significant labor needs across a wide range of economic sectors.

We in Santa Barbara should be as aware of this as anyone. Many of these workers are here illegally, but have been here for years, and are honest, hardworking, and with kids who were born in America and thus automatically U.S. citizens.

It seems to me we need a well thought-out immigration policy that deports illegals who are criminals, stops the massive flow of new people across our borders, and provides the many illegal immigrants who have become a good part of our society a pathway to citizenship.

And the fact is that, depending on actual scale of immigration efforts, we could face substantial labor shortages, especially given already historically low unemployment.

Now, add all the uncertainty regarding tariffs to the mix. Note that tariffs have been around for most of time, typically used carefully to deal with unfair business tactics by foreign countries.

We’ve seen “dumping” of certain commodities or products by foreign countries, designed to unfairly weaken or even eliminate U.S. competitors.

But history would suggest that large-scale tariffs arguably wind up increasing the costs of products around the globe, which in turn leads to inflation and lower economic growth.

It seems unrealistic to expect that companies will simply absorb tariff costs. Instead, they will need to protect margins and pass along tariff costs to consumers.

Then there’s U.S. tax policy, with two dramatically opposed impacts.

On one hand, lower taxes would be expected to stimulate economic growth. We’ve seen this movie before as tax cuts leave more money in the hands of individuals and businesses to spend and invest.

But — and this is a big but — we already have significant budget deficits and massive federal debt, so will Congress actually have the guts to cut spending to offset lower tax revenues? Or will it run even bigger deficits that make our debt problems worse?

Note there are economists who argue that tax rate cuts create economic growth, which in turn actually ends up creating more tax revenue.

But while simply hoping we can grow out of our deficit/debt problems is easier than actually having to cut spending to balance the budget, HOPE IS NOT A PLAN.

There’s another big unknown that could shift economic outcomes — and that’s artificial intelligence.

AI is still clearly in its infancy, and while I am absolutely an amateur in trying to understand AI, its potential impact on our world seems huge.

The key appears to be “efficiency,” with machines doing work better and faster than people.

There are already signs of this as demand for computer programmers is falling with the computers doing their own programming (dubbed “machine learning”).

Self-driving cars are getting close to reality so what will happen to taxi and Uber drivers?

Prototypes of robots making your morning latte and serving drinks already exist (although CNBC’s Jim Cramer noted ordering a dry martini, shaken not stirred, from a robot that simply responded with a blank stare).

Medicine could change with faster new drugs coming to market (think how fast COVID-19 vaccines were developed), and computers helping doctors with diagnosis.

Mathematical problems once thought unsolvable could be solved in seconds.

But there are also very significant concerns about the evil potential of AI, with cybercrime, cyberwarfare, computer scams and more.

Regardless, it seems clear that this new technology is a potential game changer so stay tuned.

And we should never forget about geopolitical risk. The sad fact is that human beings seem to have an incredible knack for trying to steal each other’s stuff and dominate each other. 

Obvious concerns today include Russia/Ukraine and China’s never-ending threat to seize Taiwan.

Tensions seem to be higher even among allies — and today’s friends could always become tomorrow’s adversaries. We’re going to need some great world leaders to guide us through these challenging times.

Finally, there’s a great old saying that I love:“ You never get hit by the bus you see.” So many variables that can lead to different conclusions and predictions about the future.

And that, my friends, is why all economists have two hands!