Moody’s chief economist Mark Zandi warns the US economy may slip into recession by the end of 2025. Tariffs, weak consumer spending, and inflation pressures are key risks. Here’s the full analysis.
Moody’s Economist Sounds the Alarm
Mark Zandi, the chief economist of Moody’s Analytics, says that the US economy is once again in the global limelight. He says that the country might be in a full-blown recession by the end of 2025. His most recent forecast lists tariffs, falling consumer demand, and restrictive policies as major factors that will slow down the US economy.
Why a Recession Might Happen in 2025
Zandi says that a number of economic warning signs are going off at the same time:
- Tariffs on imports are making things more expensive for both firms and consumers, which lowers their buying power.
- Consumer spending, which makes up almost 70% of the US GDP, is starting to slow down.
- Even if the Federal Reserve has taken steps to lower inflation, it is still high.
- Construction and manufacturing are not doing well, which means that important growth engines are slowing down.
- Immigration restrictions are making it harder for the workforce to grow, which is hurting both productivity and wages.
- Zandi considers this a circumstance where even the Federal Reserve’s interest rate decreases could not be enough to stop a downturn.
The Big Picture
Other experts agree with Moody’s opinion. Torsten Slok of Apollo Global Management has said that there is a 90% chance that the US would go into a recession in 2025 if tariffs are not changed. Economists are also starting to worry again about stagflation, which is when inflation is high and GDP is poor at the same time.
Zandi says that what happens in California and New York, two of the biggest state economies, might have a big effect on whether the US falls into a recession. In these areas, rising costs, job losses, and problems with housing might set the tone for the national economy.
What It Means for People in the US
If the prediction of a recession comes true:
- Jobs: Unemployment could go up as businesses deal with greater prices and less demand.
- Housing: Mortgage rates and the cost of housing could go up, especially in cities.
- Costs of living: Tariffs and inflation may keep making food, fuel, and other basic items more expensive.
- Global markets: A recession in the US might affect trade around the world, which would have an impact on developing economies.
Is there a way out?
Economists say that changing policies, including lowering tariffs and making it easier for people to move to the US, might help lessen the effects. Experts believe that stimulus measures, innovative manufacturing methods, and maintaining public confidence in the economy are crucial in averting a complete downturn.
Conclusion
Moody’s warning that the US economy is on the verge of recession by the end of 2025 is more than simply a prediction; it’s a wake-up call. Policymakers, corporations, and consumers all need to get ready for possible problems. There is still time to avoid the worst outcomes, but the next several months will be very important in deciding whether America grows or has to deal with a recession.
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