Moody\u2018s Analytics Chief Economist Mark Zandi warned on Sunday that the American economy stands \u201con the precipice of recession\u201d following last week\u2019s disappointing economic data releases that sent major indexes tumbling.<\/p>\n
Economic Data Points To Contraction<\/p>\n
\u201cThe economy is on the precipice of recession. That\u2019s the clear takeaway from last week\u2019s economic data dump,\u201d Zandi wrote on X. \u201cConsumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall.\u201d<\/p>\n
July\u2019s jobs report showed just 73,000 new positions added, well below the expected 110,000<\/a>. Unemployment rose to 4.2% while wage growth remained elevated at 3.9% year-over-year. The report included massive downward revisions of 258,000 jobs for May and June combined.<\/p>\n Tariffs, Immigration Policy Blamed<\/p>\n Zandi attributed the economic weakness to \u201cincreasing U.S. tariffs and highly restrictive immigration policy.\u201d He explained that tariffs are \u201ccutting increasingly deeply into the profits of American companies and the purchasing power of American households.\u201d<\/p>\n The economist noted that while unemployment remains low, \u201clabor force growth has gone sideways\u201d due to a shrinking foreign-born workforce and declining participation rates. He highlighted an \u201ceconomy-wide hiring freeze, particularly for recent graduates, and the decline in hours worked.\u201d<\/p>\n See Also: Chris Christie says Trump\u2019s Job Report Reaction Is Like That Of A \u2018Petulant Child\u2019: He Fires The Messenger That Brings Bad News<\/a><\/p>\n Fed Policy Pivot Expected<\/p>\n The weak data has strengthened calls for Federal Reserve policy changes. Fundstrat\u2019s Tom Lee argued the historic job revisions indicate \u201cthe labor market is further away from Fed mandate than Fed realizes,\u201d suggesting a policy pivot could support higher price-to-earnings ratios<\/a>.<\/p>\n Markets now fully price in two rate cuts by December, with September odds at 76%. Two-year Treasury yields plunged 22 basis points to 3.75% following Friday\u2019s data.<\/p>\n Market Impact Widens<\/p>\n Major indexes posted sharp declines on Friday. The SPDR S&P 500 ETF SPY fell 1.60% to 6,238.01, while the Invesco QQQ Trust QQQ dropped 1.96% to 22,763.31. The SPDR Dow Jones Industrial Average ETF DIA declined 1.23% to 43,588.58.<\/p>\n