Mark Zandi, chief economist at Moody’s Analytics, has issued a stark warning about the state of the U.S. economy, pointing to high tariffs and strict immigration policies as major factors fueling a slowdown.
In a post on X (formerly Twitter) on Sunday, Zandi revealed state-level data indicating that the U.S. economy is “on the edge of recession.”
“Based on my review of the data, states that make up almost one-third of U.S. GDP are either already in recession or facing high risk. Another third are barely holding steady, while the rest are still expanding,” Zandi explained.
DMV region hit hardest
According to his analysis, the downturn is not limited to one region, though the Washington, D.C. metropolitan area stands out due to federal job cuts. Between January and May, the D.C.-Maryland-Virginia region lost around 22,100 federal jobs, data from the Federal Reserve shows.
These cuts followed President Trump’s inauguration when the Department of Government Efficiency (DOGE) initiated reductions in federal employment to curb government spending.
States most at risk
Beyond the capital region, Zandi identified West Virginia, Iowa, Maine, New Jersey, and South Dakota as among the states most vulnerable to recession.
In total, his assessment ranked:
- 22 states (including D.C.) as either in recession or at high risk
- 13 states as “treading water”
- 16 states as still in “expansion”
Southern states remain relatively strong but are beginning to show signs of slowing. California and New York — which together make up over 20% of national GDP — are managing to stay afloat, Zandi noted. California contributes 14.5% of U.S. GDP, while New York accounts for 7.92%. He placed both states in the “treading water” category, while states like Texas, South Carolina, and Idaho were listed as expanding.
A third of industries already in recession
Earlier this month, Zandi cautioned that roughly one-third of U.S. industries — including manufacturing, agriculture, and even the federal government — are already in recessionary conditions.
When asked about his methodology, Zandi said he relied on employment, payroll, and industrial production data, emphasizing that his findings are not predictive forecasts. He also revealed that Moody’s has developed recession-leading indicators powered by machine learning, which will be detailed soon.
Policy concerns
Zandi has repeatedly voiced concerns that U.S. trade tariffs are eating into corporate profits and reducing household purchasing power, while stricter immigration policies are shrinking the workforce and long-term economic growth.
“The economy is on the brink of recession,” Zandi wrote. “Consumer spending has stalled, construction and manufacturing are in decline, and job losses are imminent. With inflation still high, the Federal Reserve has little room to step in with support.”
