Roughly a third of United States industries are already in recession, according to Mark Zandi, chief economist at Moody’s Analytics.
According to Zandi, the current mix of expanding, stagnant, and contracting sectors highlights why recession risks remain elevated, he said in an August 17 post on X.
“1/3 of the economy’s industries are in recession, 1/3 are treading water, and 1/3 are expanding. This underscores why recession is such a threat,” Zandi said.
He divided the economy into three categories: one-third of industries are expanding, one-third are treading water, and one-third are in recession. The six industries he identified as already contracting account for nearly one-fifth of U.S. economic output.
Manufacturing, with a 10.2% share of value added, represents the largest sector in decline, followed by transportation and distribution at 9.4%. Construction, contributing 4.6%, has also turned negative. Smaller but still notable contractions are evident in the federal government (3.7%), mining (1.4%), and agriculture (0.9%).
Recession triggers
Zandi said policy and trade pressures, higher tariffs, tighter immigration rules, and budget cuts are straining manufacturing, logistics, and construction sectors highly sensitive to labor, global demand, and public spending.
By contrast, healthcare, state and local government, and technology are still expanding. Real estate, which makes up 14.1% of the economy, is also growing modestly, supported largely by housing rents, signaling resilience despite broader weakness.
Notably, Zandi acknowledged his industry breakdown is partly subjective, especially around technology, but warned that the economy is operating on a narrow margin. Therefore, any spillover into expanding sectors could quickly tip it into a full recession.
As reported by Finbold, Zandi previously cautioned that the U.S. economy is “on the precipice of recession,” though not yet officially in one, citing jobs data as a key metric.
In July, more than 53% of industries shed jobs, with healthcare the only sector posting meaningful gains. Historically, such broad-based declines have coincided with recessions.
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