State Economies at Risk of Recession
A recent analysis by Mark Zandi, chief economist at Moody’s Analytics, reveals that over 20 states are currently experiencing economic downturns or are nearing recession.
As of late August, 21 states along with the District of Columbia were identified as in recession or facing high risks of it. Zandi noted that 13 states are significantly struggling, while 15 others are showing signs of economic growth.
“The data at the state level sheds light on the broader U.S. economy’s precarious situation,” Zandi shared on X. According to him, nearly a third of the states are either in recession or at a high risk of entering one, while another third is stagnant, and the final third is growing.
Washington, D.C., stands out in the analysis due to noticeable job cuts in government, which affects its economic stability.
Minimal Job Growth in the U.S.
Moody’s pointed out that the U.S. economy has seen “virtually no job growth” last month. Notably, many of the states identified as being in recession or at risk play significant roles in the national economy. The states contributing more than most include Illinois, Georgia, Washington, New Jersey, Massachusetts, and Virginia—each accounting for sizable shares of the nation’s GDP.
Fed’s Concerns about Inflation Amid Rate Cuts
The analysis also pointed out that the economic conditions in states like California and New York, which combined contribute over one-fifth of the U.S. GDP, are critical for the nation as a whole. These states, along with others like Texas and Florida, are reported to have growing economies, although Zandi observed that the growth in southern states appears to be slowing.
With the ongoing government shutdown, some economic reports, like the September jobs report, have already been delayed. There’s also an anticipated postponement of the Consumer Price Index report. The Bureau of Labor Statistics is reactivating some furloughed workers to help facilitate the release of these important economic updates, now scheduled for October 24th.
Despite persistent inflation hovering above the Federal Reserve’s 2% target—exacerbated by the implementation of tariffs—the Fed has reduced interest rates for the first time in 2025, acknowledging signs of a weakening labor market.
