The U.S. economy is teetering on the edge of recession, according to Mark Zandi, Chief Economist at credit rating agency Moody’s, who warned that weak consumer spending, job pressures, and housing troubles are pushing the country toward a downturn.
Zandi, one of the first economists to flag the 2008 financial crisis, said nearly one-third of the states — representing about a third of U.S. GDP — are already in recession or face a high risk of entering one. “Another third are just holding steady, and the remaining third are growing,” he wrote on social media platform X.
In an interview with Newsweek, Zandi cautioned that ordinary Americans will feel the squeeze through rising prices and job instability. “Prices are already rising, 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 they’re buying on an everyday basis,” he said.
The economist highlighted two pressing risks: U.S. tariffs that are eroding corporate profits and deepening struggles in the housing market. He forecast that inflation, now at 2.7 percent, could climb above 3 percent and approach 4 percent within the next year.
Regional disparities are also emerging. Southern states remain relatively strong, though growth is slowing. California and New York, which together contribute more than 20 percent of U.S. GDP, are “holding their own,” Zandi noted, adding that their resilience will be vital in preventing a nationwide downturn.
At the same time, states such as Wyoming, Montana, Minnesota, Mississippi, Kansas, and Massachusetts are at significant recession risk. The Washington, D.C., area has been particularly hard hit by government job cuts, he said.
Zandi pointed to consumer spending trends as a worrying sign. From January through July 2025, U.S. household spending has stagnated compared to the end of last year — the weakest performance since 2008–09.
(IANS)
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