Nearly half of all US states are sliding into recession, according to a stark warning from Mark Zandi, chief economist at Moody’s Analytics. His analysis shows that 23 states are already in recession or at risk, while only 16 are firmly growing. The struggling states account for 31.8% of US GDP, and the trend is expanding.
Zandi’s team assessed data including household employment, industrial production, retail sales, and building permits. Michigan, representing 2.4% of US economic growth, is the latest addition to the red category. The remaining 12 states, including California and New York, have plateaued. Zandi noted that the fate of the national economy rests on these two largest economies, which face pressures from tariffs and reduced immigration.
Major corporations cut over 150,000 jobs in October, the largest monthly total in over two decades. Sticky inflation, declining home construction, factory layoffs, and flat wages have also contributed to the bleak picture. Zandi wrote on LinkedIn that the US economy is not in recession but is struggling to avoid one.
One bright spot has been AI-driven economic growth, which has kept Wall Street near record highs and spurred data centre construction. However, recent wobbles in AI optimism have emerged. Investor Michael Burry has bet against Nvidia’s share price, and Masayoshi Son sold his Nvidia stake. If AI falters and California and New York fail to gain traction, the national economy could tip into recession, Zandi warned.
