While his latest assessment largely echoes what he said over the summer<\/a> and earlier this month<\/a>, Zandi moved the industrial bellwether state of Michigan from the \u201ctreading water\u201d list to the \u201crecessionary\u201d one.<\/p>\n That\u2019s as President Donald Trump\u2019s tariffs continue to weigh on the automakers that power the state\u2019s economy. While General Motors<\/a> and Ford reported upbeat third-quarter earnings this past week, they still see billions of dollars in tariff-related costs.<\/p>\n Meanwhile, supply-chain disruptions\u2014including China\u2019s curbs on rare-earth exports that came in retaliation to Trump\u2019s trade war\u2014have also hit production.<\/p>\n \u201cThis state-level picture mirrors the national trend: The U.S. economy is not in recession, but it is struggling to avoid one,\u201d Zandi wrote. \u201cThis is evident in the job market, as payroll job growth has come to a virtual standstill, and likely will look even weaker after all the data revisions are in.\u201d<\/p>\n Construction, manufacturing, technology, finance, government, and professional services are shedding jobs, he added, while just a few sectors, namely health care and hospitality, are still adding to payrolls.<\/p>\n Earlier this month, he sounded the alarm on the labor market, saying it\u2019s weak and getting weaker<\/a> as private-sector datasets indicate there was essentially no job growth in September.<\/p>\n Here\u2019s how the states and one federal district(*) break down:<\/p>\n Recession\/high risk\u00a0(23): Wyoming, Montana, Minnesota, Mississippi, Kansas, Massachusetts, Washington, Georgia, New Hampshire, Maryland, Rhode Island, Illinois, Delaware, Virginia, Oregon, Connecticut, South Dakota, New Jersey, Maine, lowa, West Virginia, Michigan, District of Columbia*.<\/p>\n Treading water\u00a0(12): Missouri, Ohio, Hawaii, New Mexico, Alaska, New York, Vermont, Arkansas, California, Tennessee, Nevada, Colorado.<\/p>\n Expanding\u00a0(16): South Carolina, Idaho, Texas, Oklahoma, North Carolina, Alabama, Kentucky, Florida, Nebraska, Indiana, Louisiana, North Dakota, Arizona, Pennsylvania, Utah, Wisconsin.<\/p>\n For now, economic heavyweights California and New York are treading water but could easily tip the scales. The Golden State alone accounts for a whopping 14.5% share of U.S. GDP, while the Empire State accounts for nearly 8%.<\/p>\n Both face opposing crosscurrents that may ultimately determine how the business cycle unfolds, Zandi pointed out.<\/p>\n \u201cWhether the national economy suffers a downturn appears to rest on the big California and New York economies. Neither economy is in recession, but both are struggling to gain traction,\u201d he explained. \u201cDe-globalization, including the trade war and highly restrictive immigration policy, is a headwind to growth, but artificial intelligence and the boost it is providing to investment and the stock market, household wealth, and spending is a tailwind to growth.\u201d<\/p>\n To be sure, the overall economy has been expanding at a robust clip. The\u00a0Atlanta Fed\u2019s GDP tracker<\/a>\u00a0shows third-quarter growth is pointing toward 3.9%, which would actually mark an acceleration from 3.8% growth in the second quarter.<\/p>\n At the same time, most state-level data still doesn\u2019t suggest a spike in layoffs, continuing a no-fire, no-hire environment.<\/p>\n And while the government shutdown has put several key economic indicators on hold, the Labor Department released the consumer price index<\/a> for September, which ticked higher but came in below forecasts.<\/p>\n That raised the odds for more rate cuts from the Federal Reserve later this year, delivering another boost to the economy.<\/p>\n But Diane Swonk, chief economist at\u00a0KPMG<\/a>,\u00a0warned Friday that the economy looks better than it feels<\/a> and noted inflation is still creeping higher, albeit at a slower-than-expected pace.<\/p>\n She expects the economy to slow \u201cdramatically\u201d in the fourth quarter, a turn that was already coming before the shutdown prompted the loss of 750,000 federal paychecks. Consumer stress, rising delinquencies, and tariff pass-throughs will all collide with a fragile labor market and weaker retail landscape.<\/p>\n \u201cWe\u2019re going into a very difficult holiday season,\u201d Swonk predicted.<\/p>\n <\/p>\n