Is America already in recession? Moody’s Zandi says, a third of the economy is already in and more is set to stall

US recession 2025: The US economy is already partly in recesion according to Moody’s Analytics chief economist Mark Zandi, as he highlighted that almost a third of the country’s GDP is coming from states that are either already in a recession or dangerously close to one, as per a report.

Signs of US Recession Are Already Showing in Key States

In a series of social media posts on X, Zandi gave a more detailed look at what he believes is happening beneath the surface in the United States, according to a Fortune report. He wrote, “States experiencing recessions are spread across the country, but the broader D.C. area stands out due to government job cuts,” as quoted in the report.

Zandi pointed out that, “Southern states are generally the strongest, but their growth is slowing. California and New York, which together account for over a fifth of U.S. GDP, are holding their own, and their stability is crucial for the national economy to avoid a downturn,” as quoted by Fortune.


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Three Economic Groups Emerging Across the US

Zandi divided the country into three economic groups:

Recession or High Risk

22 states that are either in a recession or at high risk of entering one: 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, District of Columbia

Treading Water

13 states are in what he called “treading water” territory, not shrinking, but not growing much either: Missouri, Ohio, Hawaii, New Mexico, Alaska, New York, Vermont, Arkansas, California, Tennessee, Nevada, Colorado, Michigan

Still Expanding

16 states are still expanding, though even their pace of growth is slowing: South Carolina, Idaho, Texas, Oklahoma, North Carolina, Alabama, Kentucky, Florida, Nebraska, Indiana, Louisiana, North Dakota, Arizona, Pennsylvania, Utah, Wisconsin

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Moody’s Model Puts Recession Odds at Nearly 50%

Zandi has already said this month that the US is on the “precipice” of a recession, and now he’s backing that up with his assessments of various datasets. Last week, he highlighted that Moody’s machine-learning model places the odds of a recession within the next year at 49%, as reported by Fortune.

US Job Market Weakens: Hiring Slows and Revisions Raise Concerns

There are warning signs in the job market too. Payrolls grew by just 73,000 last month, much lower than expected and even more concerning, job gains from previous months were revised down sharply according to the report. May’s growth was cut from 144,000 to just 19,000, and June’s from 147,000 to 14,000, so that brings the average job growth over the last three months to only 35,000, as per the Fortune report.

Zandi said he wouldn’t be surprised if future revisions show that employment is already falling, according to the report. He explained that, “Also telling is that employment is declining in many industries. In the past, if more than half the ≈400 industries in the payroll survey were shedding jobs, we were in a recession,” adding, “In July, over 53% of industries were cutting jobs, and only health care was adding meaningfully to payrolls,” as quoted by Fortune.

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Why Late 2025 Could Be the Economy’s Most Vulnerable Point

He also pointed out that even though tax cuts and government spending on defense would help growth, that would not come until next year, so the base case, according to him is that the economy avoids a recession, according to the report.

The economist said, “The economy will be most vulnerable to recession toward the end of this year and early next year,” adding, “That is when the inflation fallout of the higher tariffs and restrictive immigration policy will peak, weighing heavily on real household incomes and thus consumer spending,” as quoted by Fortune.

Zandi also highlighted that since the economy is already facing many threats, it wouldn’t take much to push it into recession, singling out a selloff in the Treasury bond market that would send long-term yields soaring, as reported by Fortune.

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FAQs

Is the US already in a recession?
Not officially, but according to Mark Zandi, about a third of the economy is already showing signs of recession or very close to it.

Which states are hit the hardest?
States like Massachusetts, Illinois, Georgia, and even D.C. are already experiencing sharp slowdowns or job losses.