Moody's Economist Warns of Recession in 22 U.S. States Despite National Growth
New York, Thursday, 9 October 2025.
Despite national GDP growth, 22 U.S. states face economic contractions, highlighting regional disparities. Moody’s economist Mark Zandi warns of recession risks, urging policymakers to address these state-level challenges.
Current Economic Landscape in the U.S.
As of October 7, 2025, Moody’s Analytics, led by Chief Economist Mark Zandi, has identified that 22 states within the United States are experiencing economic contractions, which could be classified as recessions. This revelation comes despite a national GDP growth rate of 3.8% in the last quarter, suggesting a disconnect between national economic figures and local realities [1][2][3].
Key States and Economic Indicators
Among the states facing economic downturns are Illinois, Minnesota, and the District of Columbia, with the latter experiencing significant impacts due to federal job cuts and funding reductions [1][2]. Conversely, states such as Texas and Florida continue to see economic expansion, bolstered by robust population growth and steady economic activities [2]. Notably, California and New York, two of the largest contributors to the national GDP, are currently ‘treading water’ but remain critical to the national economic outlook [1][3].
Factors Contributing to State-Level Recessions
The economic strain in these 22 states is attributed to various factors, including policy-driven issues such as tariffs and immigration restrictions, which have particularly affected industries reliant on agriculture and manufacturing. The impact of these policies has been felt most acutely in states like Iowa, Kansas, and Georgia, where agricultural and manufacturing sectors are prominent [1][2][3]. Additionally, the federal job cuts have disproportionately affected states dependent on government employment, exacerbating the economic challenges they face [2].
Implications for Policymakers and the Broader Economy
This state-level economic contraction highlights the importance of tailored economic policies that address local challenges while supporting national growth. Policymakers are urged to consider these disparities when developing economic strategies. As Mark Zandi points out, while the national economy remains resilient, the risk of a broader recession looms, particularly if major economic centers like California and New York begin to falter [1][3]. The situation demands vigilant monitoring and proactive measures to stabilize affected regions and prevent further economic decline [3].