With slowing job gains, rising inflation, and Trump’s tariffs pressuring trade, Moody’s warns the nation may be edging toward recession. Another US is close to Recession warning has come, this time from ark Zandi, chief economist at credit rating agency Moody’s. A new analysis of state-level data suggests that the US economy is “on the edge of recession,” said Mark Zandi of Moody’s. Zandi, a respected economist who was one of the first to forecast the 2008 financial crisis, warns that states accounting for nearly a third of the nation’s economic output are either already in a downturn or are at high risk of entering one.”Based on my assessment of various data, states making up nearly a third of US 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 social media.The economic pressure is expected to directly impact everyday Americans in two key ways: higher prices and job instability. In an interview, Zandi noted that rising costs will soon become impossible to ignore, especially for essential items. “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,” he said.Zandi’s assessment points to several factors, including sluggish consumer spending, which has seen its weakest growth since the 2008-09 financial crisis. He also raised concerns about the impact of US tariffs on company profits and continued struggles in the housing market.
Moody’s warns that many US States showing recession signs
The data reveals a mixed picture across the country. States in the South are generally the strongest, though their growth is beginning to slow. Meanwhile, some of the nation’s largest economies, like California and New York, are described as “holding their own,” and their stability is seen as critical to preventing a full-blown national recession.However, many states are showing signs of vulnerability. Wyoming, Montana, Minnesota, Mississippi, Kansas, and Massachusetts were all identified as being at high risk of recession. The broader Washington, D.C. area is also notable for its economic struggles, which Zandi attributes to government job cuts.Adding to the forecast, Zandi predicts that the annual inflation rate, currently at 2.7%, could rise to nearly 4% within the next year, further eroding purchasing power for consumers.
Recession ‘warning sign’ in the US Jobs report
The US Bureau of Labor Statistics (BLS) recently revised down its employment estimates for May and June by a total of 2,58,000 jobs. Following the revisions, the jobs report revealed the slowest three-month hiring pace since the pandemic-induced recession of 2020. The average monthly job growth in 2025 has dropped to just 85,000 — significantly below the pre-pandemic average of 177,000. While this slowdown doesn’t confirm a recession, experts say that it adds to a growing list of concerning indicators, including weaker GDP, slower manufacturing, and declining services sector activity.