Moody’s Analytics chief economist Mark Zandi warns the US economy is “on the precipice of recession.” Tariffs, immigration policies, and federal measures are slowing growth, with some sectors already contracting.
Washington D.C.: Moody’s Analytics chief economist Mark Zandi has raised concerns about the US economy, stating it is “on the precipice of recession.” While the nation is not officially in a recession, Zandi warns that some industries are already experiencing economic contraction, and overall conditions may worsen.
In an interview with Business Insider, Zandi attributed growing uncertainty to policy-related factors, including tariffs, restrictive immigration rules, federal spending cuts, and Federal Reserve measures. These developments have slowed economic growth, accelerated inflation, and prompted businesses to postpone hiring and investment.
“Economic uncertainty is extremely high,” Zandi said. “Businesses aren’t cutting jobs yet, but expansion and investment plans are on hold.” He also noted that tariffs, though gradual so far, are beginning to affect consumer prices and are expected to intensify in the coming months.
According to Zandi, a recession is characterized by sustained declines in job growth over several months. By this standard, the US is not currently in a full recession, though sectors like construction and manufacturing are already facing downturns. He also commented that potential interest rate cuts in September may offer limited relief, as the market has largely priced them in.
For investors, Zandi cautioned that no asset class is entirely safe during a severe recession. “Long-term rates may fall, helping bond prices, but in a downturn, no investment is immune,” he said. Continued tariff increases could also undermine the safe-haven status of US Treasurys and the dollar.
Ultimately, Zandi emphasized that policy decisions will determine the depth and duration of any potential recession. A rollback of tariffs or more balanced immigration policies could signal recovery, though he considers such shifts unlikely in the near term.
“Policy is driving the economy to this point,” Zandi concluded. “If we do enter a recession, how deep and long it will be depends entirely on policy decisions moving forward.”
