Moody’s Analytics chief economist Mark Zandi has warned that nearly a third of the U.S. economy is already in recession or at high risk of sliding into one.
His view is based on state-level business cycle ratings that categorize economies as expanding, treading water, or in recession/high risk, with each state’s weight determined by its share of national GDP.
According to Zandi’s data, shared in an August 24 post on X, 23 states, alongside Washington DC fall into the recession or high-risk category, together making up almost one-third of national output.
A breakdown shows that Illinois, which contributes about 3.9% of GDP, and Massachusetts, at 2.7%, are already contracting. Smaller states are also struggling, including Wyoming, which represents 0.2% of GDP, and Mississippi, at just over 0.5%. The broader Washington, D.C., region, accounting for 0.6% of output, stands out due to job cuts in government.
States holding U.S. economy
Another third of the economy is essentially stagnant, with growth stalled. Under this category, California and New York fall into this tier, together representing more than 22% of GDP.
Their relative stability has been critical in preventing the national economy from tipping into a deeper downturn. Other states in this group include Michigan, at 2.4% of GDP, Ohio at 3.1%, and Nevada at 0.9%.
The final third of the country is still expanding, led by the South and West. Texas, which makes up 9.4% of GDP, and Florida, at 5.8%, are among the biggest drivers of growth. Pennsylvania, contributing 3.5%, is also expanding, alongside smaller but resilient states such as Idaho and Oklahoma, with GDP shares of 0.4% and 0.9% respectively.
Industries already in a recession
As reported by Finbold, Zandi, who remains broadly cautious about the economy, has also identified industries already in decline.
To this end, roughly one-third of U.S. industries, including manufacturing, transportation, and construction, are in recession. Smaller sectors such as federal government services, mining, and agriculture are also shrinking, together accounting for nearly one-fifth of output.
By contrast, healthcare, technology, and state and local government remain in expansion, while real estate shows modest growth.
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