Nearly one-third of US GDP at risk as states face recession
In a new warning shared on social media, Zandi said that states representing nearly one-third of America’s GDP are already in recession or at high risk of entering one, as per a report. Another third are “treading water,” while the rest are still growing, though momentum is fading fast.
Michigan downgraded to recession zone amid auto industry struggles
Zandi’s latest assessment updates his summer outlook, with Michigan, an industrial hub powered by automakers, now downgraded from “treading water” to “recessionary,” as per a Fortune report.
He pointed to US president Donald Trump’s tariffs as a key drag on Michigan’s economy, weighing heavily on General Motors and Ford, which despite reporting solid third-quarter results, continue to face billions in tariff-related costs, as per the report. Supply-chain disruptions, including China’s rare-earth export curbs in response to the trade war, have also hit production across the state.
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US job market stagnates as key industries shed workers
The economist wrote, “This state-level picture mirrors the national trend: The U.S. economy is not in recession, but it is struggling to avoid one,” adding, “This is evident in the job market, as payroll job growth has come to a virtual standstill, and likely will look even weaker after all the data revisions are in,” as quoted by Fortune.Zandi added that job losses are now emerging in construction, manufacturing, technology, finance, government, and professional services, with only health care and hospitality still adding jobs, as per the report.Earlier this month, Zandi warned that the labor market is weakening, noting that private-sector data shows almost no job growth in September, reported Fortune.
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23 states already in or near recession
According to his analysis, 23 states are already in or near recession, which includes, 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, Michigan, District of Columbia, as per the report.
Another 12 states are treading water, which includes, Missouri, Ohio, Hawaii, New Mexico, Alaska, New York, Vermont, Arkansas, California, Tennessee, Nevada, Colorado, as per Fortune.
While 16 states are expanding, including, South Carolina, Idaho, Texas, Oklahoma, North Carolina, Alabama, Kentucky, Florida, Nebraska, Indiana, Louisiana, North Dakota, Arizona, Pennsylvania, Utah, Wisconsin, reported Fortune.
California and New York could decide America’s economic future
Zandi emphasized that California and New York, which together make up more than 22% of US GDP, could determine whether the broader economy tips into a downturn.
He pointed out that, “Whether the national economy suffers a downturn appears to rest on the big California and New York economies. Neither economy is in recession, but both are struggling to gain traction,” as quoted by Fortune.
Zandi added that, “De-globalization, including the trade war and highly restrictive immigration policy, is a headwind to growth, but artificial intelligence and the boost it is providing to investment and the stock market, household wealth, and spending is a tailwind to growth,” as quoted in the report.
Economists see sharp slowdown ahead despite strong GDP data
Despite these challenges, the economy as a whole continues to show surprising strength. The Atlanta Fed’s GDP tracker points to 3.9% growth in the third quarter, slightly higher than the previous quarter’s 3.8%, reported Fortune.
Still, many economists warn the resilience may not last. Diane Swonk, chief economist at KPMG, said the economy “looks better than it feels,” noting that inflation remains sticky and consumer stress is building, as per the report.
She expects growth to “slow dramatically” in the fourth quarter, especially after the government shutdown, which left 750,000 federal workers without pay, as per the report. Rising delinquencies, weak retail demand, and tariff pressures, she said, are converging at a difficult moment. Swonk cautioned, “We’re going into a very difficult holiday season,” as quoted by Fortune.
FAQs
How many states are currently in or near recession?
According to Zandi, 23 states are already in or near a recession.
What factors are slowing US economic growth?
Trade wars, restrictive immigration policies, and global supply issues are major headwinds.
The post Which US states are in recession 2025: Top economist warns: These 2 states could tip America into recession while another one is in danger zone appeared first on Veritas News.
