Moody’s:”Nearly one-third of U.S. economy at risk of recession”

Nearly one-third of U.S. economy at risk of recession, says Moody’s Chief Economist

A growing number of U.S. states are showing signs of economic strain, according to Moody’s Analytics Chief Economist Mark Zandi, who warns that nearly one-third of the nation’s GDP is tied to states either already in recession or at high risk of entering one.

“Based on my assessment of various data, states accounting for nearly one-third of U.S. GDP are either in recession or at high risk of falling into one,” Zandi said on X. “Another third are just holding steady, and the remaining third are expanding.”

Zandi—who has consistently cautioned about the fragility of the U.S. economy—recently described the nation as being on the “precipice of recession,” pointing to weakness in consumer spending, jobs, and manufacturing. He attributed much of the strain to tariffs cutting into corporate profits and softness in the housing market.

According to his breakdown:

• 21 states and Washington, D.C. are in recession or high risk, including Massachusetts, Washington, Illinois, Virginia, and New Jersey.

• 13 states are “treading water,” such as New York, California, Michigan, and Ohio.

• 16 states are still expanding, led by Texas, Florida, North Carolina, and Pennsylvania.

Zandi noted that economic heavyweights New York and California are “holding their own,” even as regional slowdowns spread.

Industry experts point to trade and agriculture exposure as key vulnerabilities. “Many of these states lean heavily on farming or on import and trade activity. Those are exactly the industries most exposed under current trade policies,” said Kevin Thompson, CEO of 9i Capital Group.

The mixed outlook underscores a fragmented U.S. economy, where some regions remain resilient while others are already contracting under trade pressures and weakened demand.

Illinois (3.85% of U.S. GDP),

Georgia (3.03%),

Washington (3.02%),

New Jersey (2.93%),

Massachusetts (2.73%)

Virginia (2.66%) were the largest state economies listed as being in recession or at high risk of entering one.

California (14.5%),

New York (7.92%),

Ohio (3.14%) and Michigan (2.44%)

Texas (9.41%),

Florida (5.78%) led the list of expanding states economies.

What do 7 out of 10 recession states have in common?

What do the two largest states with expanding economies have in common?