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Key Points

Moody's Chief Economist Mark Zandi warns that the US economy is teetering on the edge of a recession based on state-level data. He states that states representing nearly one-third of US GDP are already in recession or at high risk. Zandi predicts inflation will climb toward 4% by next year, making price increases impossible for consumers to ignore. His analysis shows consumer spending has stagnated at levels worse than any year since the 2008 financial crisis.

Key Points: Moody's Mark Zandi Warns US Economy on Brink of Recession

  • Nearly one-third of US states by GDP are in or near recession
  • Zandi predicts inflation will rise from 2.7% to near 4%
  • Consumer spending in 2025 shows worst stagnation since 2008-09
  • Southern state growth is slowing while California and New York hold steady
2 min read

US economy on brink of recession, says Moody's Chief Economist

Moody's Chief Economist Mark Zandi warns nearly a third of US states are in or near recession, predicting rising inflation and job disruptions for Americans.

"States making up nearly a third of US GDP are either in or at high risk of recession - Mark Zandi"

New Delhi, Sep 3

The state-level data in the US shows that the country is "on the edge of recession", said Mark Zandi, chief economist at credit rating agency Moody's.

According to Zandi, who was among the first economists to predict the 2008 financial crisis, the states that make up nearly a third of the US gross domestic product (GDP) are currently either in recession or at high risk of entering one.

"Based on my assessment of various data, states making up nearly a third of US GDP are either in or at high risk of recession, another third are just holding steady, and the remaining third are growing," he wrote on social media platform X.

Further, in an interview with Newsweek, Zandi said: "For the average American, that risk shows up in two ways. It means higher prices at the store, and it means job disruption across industries tied to food, goods, and transportation."

"Prices are already rising; you can see it in the data, but they're going to rise to a degree that it will be impossible for people to ignore. They will see it clearly in the things that they're buying on an everyday basis," he added.

The economy is very close to a recession, based on data about spending, jobs, and manufacturing, he said, adding that he is worried about US tariffs hurting American companies' profits and ongoing troubles in the US housing market.

Zandi also predicted that the annual inflation rate, currently at 2.7 per cent, will rise above 3 per cent and near 4 per cent by this time next year.

States experiencing recessions are spread across the country, but the broader DC area stands out due to government job cuts, Zandi said.

His analysis showed that southern states are generally the strongest, but their growth is slowing. California and New York, which together account for over a fifth of U.S. GDP, are holding their own, and their stability is crucial for the national economy to avoid a downturn

Wyoming, Montana, Minnesota, Mississippi, Kansas, and Massachusetts were some of the states at recession risk.

US consumers' spending in 2025 until July has barely budged from last year’s end – worse than any year since 2008-09, indicating an economy on the brink of a recession, he noted.

- IANS

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Reader Comments

S
Sarah B
As someone who lived through 2008 in the US, Zandi's predictions are usually accurate. The housing market troubles he mentions are particularly concerning for middle-class Americans.
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Priya S
While this is concerning, India's economy is showing resilience. Maybe this is an opportunity for Indian companies to capture more global market share? 🇮🇳
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Michael C
The inflation predictions are worrying. If US inflation hits 4%, it will affect global commodity prices and ultimately impact Indian consumers too through imported inflation.
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Ananya R
My brother works in California tech sector. He says layoffs have already started quietly. This news confirms his fears. Hope the Indian government prepares for possible reverse migration.
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Vikram M
The article mentions government job cuts in DC area. This could affect H1B visa processing and immigration policies. Important for Indian students planning US education next year.

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