New Delhi– The U.S. economy is edging toward recession, with several states already showing signs of contraction, according to Mark Zandi, chief economist at Moody’s.
Zandi, who was among the first to flag the 2008 financial crisis, said that states accounting for nearly one-third of America’s gross domestic product (GDP) are either in recession or at high risk of entering one.
“Based on my assessment of various data, states making up nearly a third of U.S. GDP are either in or at high risk of recession, another third are just holding steady, and the remaining third are growing,” Zandi wrote on X.
In an interview with Newsweek, he explained how the downturn could hit households. “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,” he said.
“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,” Zandi added.
He said indicators on spending, jobs, and manufacturing point to an economy “very close” to recession, with U.S. tariffs weighing on corporate profits and the housing sector remaining under pressure. He also projected that inflation, currently at 2.7 percent, will climb above 3 percent and approach 4 percent by next year.
Zandi’s analysis showed that recession risks are spread across the country, with the Washington, D.C. area hit particularly hard by cuts in government jobs. Southern states remain relatively strong but are slowing, while California and New York—together accounting for more than a fifth of U.S. GDP—are holding steady, a factor he said is crucial to avoiding a nationwide downturn.
States flagged as at risk included Wyoming, Montana, Minnesota, Mississippi, Kansas, and Massachusetts.
He noted that consumer spending through July 2025 has barely grown compared with late last year—the weakest trend since the 2008–09 crisis—underscoring the fragility of the recovery. (Source: IANS)
