ANALYSIS: Despite strong national figures\u20143.8% GDP growth and 4.3% unemployment\u2014large parts of the U.S. are effectively in recession, according to Moody\u2019s Analytics. Chief economist Mark Zandi exclusively told Fortune\u00a0that 22 states are contracting and many lower- and middle-income households are \u201changing on by their fingertips,\u201d struggling with debt and slowing wage growth despite steady employment. Private data during the federal shutdown shows weakening consumer confidence, particularly among those earning under $35,000. Zandi warned that if economic softness spreads from smaller, manufacturing-heavy states to giants like California or New York, the national economy could tip into recession.<\/p>\n
Everything should feel fine in the economy. Gross domestic product was up a healthy 3.8% in the past quarter,<\/a> and unemployment has stayed at a steady 4.3%. So why does it seem so tough?<\/p>\n The short answer is: Depending on where you live and who you are, the environment around you is recessionary.<\/p>\n According to analysis from Moody\u2019s Analytics, 22 U.S. states are seeing their economies contract. Meanwhile, just 16 are seeing economic growth, while 13 are classified as \u201ctreading water.\u201d That said, the states contributing the most to U.S. GDP\u2014California, Texas, and New York\u2014are all in the clear, pushing the overall growth of the country into the green as a result.<\/p>\n But for those who don\u2019t live in the wealthier states (and indeed, aren\u2019t on the higher end of the income ladder within those regions), things \u201cdon\u2019t feel very good,\u201d according to Moody\u2019s chief economist, Mark Zandi.<\/p>\n Zandi told Fortune in an exclusive interview that lower-income households are \u201changing on by their fingertips financially.\u201d He explained: \u201cThey\u2019ve got a job, so that\u2019s why they\u2019re still able to spend and remain engaged in the economy, but increasingly \u2026 the grip feels more tenuous because no one\u2019s getting hired.\u00a0You can sustain that for a while, but you can\u2019t sustain that forever. If the layoffs do pick up, that lower-middle-income group is gonna get nailed\u2014and they have no options, because they really don\u2019t have much in the way of saving.<\/p>\n \u201cThey have debt: They have auto debt, they have student loan debt, they may, if they\u2019re lucky, have a mortgage, but they\u2019re gonna struggle, and their world is going to descend into recession pretty quickly.\u201d<\/p>\n In the absence of federal data during the current government shutdown, private surveys have painted a picture of a weakening consumer. The Conference Board\u2019s U.S. Consumer Confidence Survey, released at the end of September, found that by income cohort, those on the lowest end ($25,000 to $35,000) felt worse about the economy at present than when the survey hit an average low in April this year. Moreover, a little under 20% of respondents said jobs were hard to get, and 25% expected the market to get tougher.<\/p>\n Story Continues <\/p>\n