Almost half of the states in the United States are teetering on the brink of recession, while the national economy battles to remain above water.
This cautionary note has been sounded by Mark Zandi, the chief economist at Moody’s Analytics, a globally respected independent economic analysis firm.
The alarming forecast arises in the wake of major companies cutting over 150,000 jobs last month, marking the highest October job reduction in more than 20 years.
The troubling situation is further compounded by persistent inflation, a slowdown in housing development, factory layoffs, and stagnant wage growth.
Zandi highlighted in a LinkedIn post, “The economic conditions at the state level reflect what is happening nationwide.”
He added, “Although the US economy is not currently in a recession, it is grappling with considerable challenges to avoid slipping into one.”
Zandi’s team analyzed a raft of data including household employment, industrial production, retail sales and building permits to sort all 50 states into three groups: recession or at risk, treading water, and expanding.
The results were bleak: 23 states are already in the red, while only 16 are firmly growing.
Those 23 struggling states account for 31.8 percent of the US’s overall GDP, and that trend is expanding.
In September, his state-by-state analysis flagged 22 regions as diving into a recession or at risk of falling into one.
Michigan, which accounts for 2.4 percent of America’s economic growth, is the latest addition to the red category.
This month, the remaining 12 — including California and New York, the two largest economies in the US — have plateaued.
‘Whether the national economy suffers a downturn appears to rest on the big California and New York economies,’ he added.
‘Neither economy is in recession, but both are struggling to gain traction.’
Zandi said both states are facing pressures from tariffs and downturns in immigration.
But there’s been one bright spot: economic growth has received a boost from AI, which has kept Wall Street trading near record highs and inspired major data center construction and spending projects.
Mark Zandi, chief economist at Moody’s Analytics, said 23 states have teetered toward or are currently in a recession. He said the fate of America’s economy rests in California and New York’s hands
The housing market has been a key concern for economists like Zandi. Several indicators – including household worth, construction, and fed lending – are tied to the sector
Still, the mood around an AI-fueled optimism has wobbled in recent days.
This week, all three major indexes have taken steep losses as big-name investors sour on the technology’s risky bets.
Among the skeptics is Michael Burry, the Big Short investor who predicted the 2008 financial crash. Last week, it emerged he has now made a huge bet that Nvidia’s share price will fall.
Then, on Tuesday, Masayoshi Son, one of tech’s most–watched investors, revealed he quietly sold off all his Nvidia shares and most of his stake in T-Mobile last month.
Yesterday, the fear index spiked amid a major sell-off.
If AI falters as an economic engine — and if California and New York can’t find their footing — the domino effect could tip the national economy into the recession it’s been teetering toward, Zandi warned.
For now, Wall Street is shrugging off the recent wave of pessimism: the Nasdaq gained 0.6 percent by midday trading today, with Nvidia, the AI lynchpin, up 1.6 percent.
But whether that bounce is real momentum or just another wobble remains the question keeping economists worried about America’s economic path.
