The U.S. economy is on the "edge of recession," and states accounting for nearly a third of national output are already in or at high risk, Moody's Analytics chief economist Mark Zandi said Sunday, citing fresh state-level readings of employment and output.
Moody's Chief Warns Recession Risk Spreads Across Key States
"Based on my assessment of various data, states making up nearly a third of U.S. GDP are either in or at high risk of recession, another third are just holding steady, and the remaining third are growing," he wrote on X.
Zandi's dashboard flags concentrated weakness around the nation's capital. He said the broader Washington, D.C., area "stands out," pointing to steep federal workforce cuts this year. According to the Richmond Fed, about 22,100 federal workers lost jobs across D.C., Maryland and Virginia from January through May.
Zandi Breaks Down How Many States Are Already In Recession
Overall, Zandi classified 22 states (including D.C.) as "recession/high risk," 13 as "treading water," and 16 as in "expansion." He added that Southern states are "generally the strongest," though growth there is slowing, while California and New York are "holding their own," an important stabilizer given their outsize share of GDP.
In a reply to an X user, he said his coincident assessment draws on payroll and household employment and industrial production and "isn't intended to be predictive," noting Moody's has also built leading recession indicators using a machine-learning model.
Mark Zandi Continues To Warn About Recession
Zandi has sharpened his warnings through August, arguing that policy choices are weighing on activity. He has cited tariffs and tighter immigration as drags on profits, purchasing power and labor supply, and last week said "the economy is on the precipice of recession… Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall."
He also highlighted three recession watchpoints, namely payroll employment, the breadth of job losses across industries and unemployment dynamics, noting the labor market's recent softening even as an official downturn has not yet been declared.
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