Mark Zandi, chief economist at Moody’s Analytics, is accelerating his warnings of an incoming recession, highlighting several troubling indicators that point to a broad-based economic slowdown.
According to Zandi, the economy is on the ‘precipice’ of a major downturn, citing recent economic data showing that consumer spending has stalled, while both the construction and manufacturing sectors are contracting, he said in an X post on August 3.
The economy is on the precipice of recession. That’s the clear takeaway from last week’s economic data dump. Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall. And with inflation on the rise, it is tough for the Fed to…
— Mark Zandi (@Markzandi) August 3, 2025
At the same time, Zandi noted that while low unemployment rates still support employment levels, job losses are likely on the horizon. This outlook is worsened by a declining labor force participation rate and a shrinking foreign-born workforce, trends that are limiting the overall supply of labor.
He also pointed to further signs of stress in the labor market, with an economy-wide hiring freeze taking hold, especially affecting recent graduates. Meanwhile, the average number of hours worked is falling, signaling weakening demand for labor.
Fears of a downturn intensified on August 1, when the stock market plunged following disappointing July job data. The U.S. economy added just 73,000 jobs last month, well below the 109,000 expected.
The unemployment rate ticked up to 4.2% from 4.1% in June. The Bureau of Labor Statistics also revised previous job gains sharply downward, slashing May’s figure by 125,000 and June’s by 133,000, a combined reduction of 258,000 jobs.
Impact of trade tariffs
Additionally, Zandi pointed to rising tariffs and restrictive immigration as key drivers of the downturn, arguing they’re squeezing corporate profits, reducing consumer power, and shrinking the U.S. labor force.
“It’s no mystery why the economy is struggling; blame increasing U.S. tariffs and highly restrictive immigration policy. <…> Fewer immigrant workers means a smaller economy,” he said.
Notably, concerns have been reignited by President Donald Trump’s recent move to implement sweeping new trade tariffs on multiple economies.
Earlier, during the first ‘Liberation Day’ in April, recession fears escalated before cooling slightly as some tariffs were lifted and the U.S. moved to reach key trade deals with partners like China.
Amid this rollercoaster, Zandi has remained one of the few experts consistently sounding a cautionary note on the health of the U.S. economy.
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