Moody’s Analytics chief economist Mark Zandi is sounding the alarm on the risk of a US recession. He warns that nearly 30% of states accounting for nearly a third of the country’s GDP are either in a recession or at high risk of entering one. The remaining states are experiencing growth, but with slowing rates.
Zandi notes that the broader Washington area is seeing more job cuts, while Southern states are generally strong. California and New York, which together account for over 20% of US GDP, are holding their own.
The Atlanta Fed’s GDP tracker indicates continued nationwide growth, but it expects to slow down to 2.3% in the third quarter from 3% in the second quarter. Zandi also says that Moody’s machine-learning-based leading recession indicator puts the odds of a downturn in the next 12 months at 49%.
Zandi attributes the increased risk to inflation fallout from higher tariffs and restrictive immigration policies, which will weigh heavily on real household incomes and consumer spending. He warns that more than half of industries are already shedding workers, a sign that’s accompanied past recessions.
Payrolls expanded by just 73,000 last month, below forecasts for about 100,000. Zandi believes the employment numbers may be declining further due to revised data showing consistent lower gains over the past three months.
Zandi notes that if more than half of industries are shedding jobs, it’s a sign of an impending recession. He points out that in July, over 53% of industries were cutting jobs, with only health care adding meaningfully to payrolls.
Source: https://fortune.com/2025/08/25/recession-warning-economic-outlook-states-high-risk-stagnating-expanding