Jens Asbjørn Bøgen
He sees red flags in every corner of the economy.
“The dashboard is blinking red,” he says.
Trump’s economy is booming — or is it?
President Trump has consistently pointed to a thriving U.S. economy as proof of his policies’ success.
High GDP growth, strong investment figures, and low inflation have been used to bolster his claims.
But not everyone is buying it.
Moody’s economist raises the alarm
Mark Zandi, chief economist at Moody’s Analytics, says the U.S. economy is edging dangerously close to a downturn.
Known for having correctly predicted the 2008 financial crisis, Zandi now sees a similar storm brewing, warning a recession could arrive by late 2025.
“On the brink of recession”
In an interview with Newsweek, Zandi stated: “I don’t think the economy is in a recession, at least not at this point, but it feels like it’s on the brink.”
His concerns aren’t speculative—they’re rooted in key economic indicators that he says are all trending in the wrong direction.
Payroll growth slows to a crawl
One of Zandi’s top concerns is jobs.
He notes that hiring has slowed to a “virtual standstill,” based on recent payroll reports.
While layoffs haven’t surged yet, the slowdown is significant enough to raise alarms about the overall health of the labor market.
The “Firewall” holding off recession
According to Zandi, the only thing keeping the economy from slipping into recession is the absence of mass layoffs.
“That’s the firewall between recession and no recession,” he explained.
But he warned that firewall may not hold for long.
What to watch: Negative employment growth
Zandi urges close attention to monthly employment data.
The moment job growth turns negative, he says, “that’s when alarm bells should start going off.”
He expects this shift to happen soon.
Tariff shock still to come
While Trump’s tariffs haven’t yet hit American consumers hard, Zandi believes the worst is ahead.
Many companies have delayed passing costs on to consumers, fearing political fallout or awaiting final tariff decisions.
Inflation set to rise – sharply
Zandi expects the annual inflation rate—currently 2.7%—to rise above 3%, and possibly approach 4% within the next year.
He warns that price hikes will soon be unavoidable and painfully obvious to consumers at grocery stores, gas pumps, and retail outlets.
A looming consumer pullback
As inflation bites and layoffs begin, Zandi predicts a consumer-led slowdown.
With tighter wallets, Americans could cut back on spending, triggering even more strain on businesses—and more layoffs in return.
This cycle, he says, is the core danger.
The vicious cycle of recession
Zandi outlines a classic economic spiral: consumers spend less, businesses lay off workers, and the resulting income loss causes even more spending cuts.
“It becomes a self-reinforcing vicious cycle,” he said—one that could push the economy over the edge.
White House pushes back
The White House dismissed Zandi’s concerns, pointing to the success of Trump’s “America First” economic agenda in his first term.
A spokesperson told Newsweek that Americans had heard similar “doom-and-gloom predictions” before—none of which came true.
States already feeling the pain
Zandi estimates that states representing about one-third of the U.S. economy are already in or approaching recession.
These include major economic engines like California and New York, where key indicators like housing starts and job growth have stalled.
These states may decide what happens to the nation,” Zandi said.
Spotlights in East and West
Together, California and New York account for more than 20% of U.S. GDP. If they contract, the ripple effect could drag down the national economy.
If they hold firm, a recession may be avoided.
Underlying strength still exists
Despite the looming risks, Zandi isn’t all doom.
He points to strong structural forces, including advancements in AI and technology, as long-term positives.
A 49% chance — and rising
Moody’s own recession model now places the probability of a U.S. recession at 49%.
It’s not a certainty, but Zandi says the odds are rising fast, warning that the dashboard is blinking read,“
