NextFin news, Moody’s Analytics Chief Economist Mark Zandi issued a warning on Friday, September 19, 2025, that the United States economy is edging close to a recession. He attributed this downturn primarily to the tariffs imposed during former President Donald Trump’s administration and substantial federal government job reductions.
Zandi highlighted that nearly one-third of the US economy’s industries, including manufacturing, agriculture, and the federal government sector, are already in recession. He pointed out that states comprising about a third of the nation’s GDP are either in or at high risk of recession, with another third maintaining steady growth and the remaining third expanding.
According to Zandi’s analysis, the Washington D.C. metropolitan area, encompassing D.C., Maryland, and Virginia, stands out due to recent federal job cuts. From January to May 2025, approximately 22,100 federal workers were laid off, a move linked to the Department of Government Efficiency (DOGE) initiatives that began shortly after Trump’s inauguration to reduce federal spending.
Beyond the capital region, states such as West Virginia, Iowa, Maine, New Jersey, and South Dakota are also identified as being in or at high risk of recession. Southern states generally show stronger economic performance but with slowing growth. California and New York, which together account for over 22% of US GDP, are currently holding steady, a crucial factor in preventing a nationwide downturn.
Zandi emphasized that the tariffs imposed during Trump’s presidency have deeply cut into American companies’ profits and reduced the purchasing power of households. Additionally, restrictive immigration policies have led to a decline of 1.2 million foreign-born workers in the labor force over the past six months, further shrinking economic growth potential.
The July 2025 jobs report revealed a significant slowdown in payroll additions, with only 73,000 jobs added compared to an expected 104,000. Moreover, revisions to previous months’ employment data showed drastic downward adjustments, with May and June payroll gains dropping from over 140,000 to under 20,000 each. Zandi noted that such revisions are typical during economic inflection points like recessions and that government employment cuts, including those by DOGE, are reflected in these figures.
Zandi also warned that consumer spending has stagnated, construction and manufacturing sectors are contracting, and employment is expected to decline further. Rising inflation complicates the Federal Reserve’s ability to intervene effectively through interest rate adjustments.
Other financial institutions, including JPMorgan, have echoed concerns about a potential recession, citing a significant drop in labor demand and stalled growth in most sectors outside health and education.
In summary, Moody’s chief economist Mark Zandi’s assessment on Friday underscores the combined effects of Trump-era tariffs, federal job cuts, and restrictive immigration policies as key contributors pushing the US economy toward recessionary conditions.
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