The likelihood of a U.S. recession within the next year has risen to an “uncomfortably high” level, according to Moody’s Analytics.

The firm’s latest machine learning-based economic indicator places the probability of a downturn at 48% as of August, based on data shared by Moody’s chief economist Mark Zandi on September 14.

Zandi noted that while the figure remains just below the 50% recession threshold, it is significant given historical patterns. 

In past decades, whenever probabilities have approached or surpassed this level, economic contractions have often followed. Since the 1960s, every spike above the mid-40% range has coincided with or preceded a recession, as reflected in shaded periods on economic charts.

Zandi’s past economic warnings 

The current probability aligns with Zandi’s earlier warnings, in which he argued that several U.S. states, representing nearly one-third of national GDP, are either already in recession or at high risk of entering one. 

Another third are “treading water,” while the remainder are growing, though often weakly. Key sectors under strain include manufacturing, construction, and transportation, while job growth has slowed sharply.

Zandi has also cited trade policy and immigration restrictions as intensifying headwinds. Tariffs, reduced government funding, and falling labor force participation, particularly among immigrants, are among the factors he believes could tip the balance.

He has placed particular emphasis on employment data: job gains have been smaller than expected, unemployment has edged higher, and revisions to earlier reports have revealed weaker performance than initially estimated.

While Zandi does not believe the U.S. is currently in a technical recession, he describes the economy as being “on the precipice.”

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