Leading economist Mark Zandi has warned that a third of the US is already in or at high risk of going into a recession.
Zandi, chief economist at Moody’s Analytics, revealed that states making up nearly a third of America’s GDP – including Virginia, Connecticut and Delaware – are in dangerous territory.
‘States experiencing recessions are spread across the country, but the broader DC area stands out due to government job cuts,’ Zandi wrote on X.
It comes after President Donald Trump and Elon Musk went on a firing spree earlier this year in an attempt to reduce the cost of the federal workforce.
States representing another third of the economy are holding steady – such as Hawaii, New York and California – and a final third are still growing.
‘Southern states are generally the strongest, but their growth is slowing,’ he explained.
South Carolina, Alabama, Kentucky and Louisiana all made the list of states still growing economically.
‘California and New York, which together account for over a fifth of US GDP, are holding their own, and their stability is crucial for the national economy to avoid a downturn,’ Zandi added.
Zandi has made repeated warnings about the state of the US economy this year.
Last month he pointed to the fact that more than half of US industries are cutting jobs as a glaring red flag that a recession is imminent.
In a post on X, Zandi argued that ‘far and away’ the most important recession indicator is ‘payroll employment.’
‘If employment declines for more than a month consecutively, we are in a downturn,’ he wrote.
Indeed layoffs have soared 140 percent from a year ago, with Artificial Intelligence rapidly disrupting the workforce.
Zandi said that, historically, it is not clear exactly when a recession starts until well after the fact.
However, he added that ‘in the past, if more than half the 400 industries in the payroll survey were shedding jobs, we were in a recession. In July, over 53 percent of industries were cutting jobs, and only healthcare was adding meaningfully to payrolls.’
Zandi also issued a terrifying ‘red flare’ warning to homeowners in July.
Mark Zandi, chief economist at Moody’s Analytics, claims a recession is looming
The housing market is a key concern for the wider economy
A ‘red flare’ warning suggests the market is experiencing major instability and a fall is imminent.
‘I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate,’ he wrote.
It comes as construction of new homes has slowed and sellers are being forced to reduce their prices or pull their homes off the market entirely.
‘Home sales are already uber depressed,’ Zandi wrote, adding that the housing market could become an issue for the wider economy.
‘Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy’s prospects later this year and early next,’ he wrote.
