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22 States Are in a Recession or on the Brink: Moody’s

Economic contraction affects 22 states with consumer confidence weakening among low-income groups amid federal layoffs and funding cuts, Moody’s Analytics reports.

  • Last month, Moody's Analytics chief economist Mark Zandi said almost half of U.S. states face downturns, with 22 contracting, 16 growing, and 13 treading water.
  • Three factors—slowing immigration, tariffs and federal job cuts—are driving contractions, while private surveys during the government shutdown show weakening consumer confidence, Moody's Analytics and Zandi said.
  • Despite national GDP growth of 3.8% and unemployment at 4.3%, large states such as California, Texas, and New York are still growing and keeping U.S. growth positive.
  • In the District of Columbia, Zandi notes the sharpest contraction due to federal layoffs and funding cuts, while lower-income households remain financially precarious with lagging wage growth this year.
  • Looking ahead, inflation persistence and big-state performance pose key risks as Michael Barr, Federal Reserve Vice Chair, warned inflation could persist through 2027 and Mark Zandi said California and New York could decide the national outcome.
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22 states are in a recession or on the brink: Moody’s

Twenty-two states are either in a recession or on the verge of a downturn, according to a new analysis from Moody's Analytics.

·Chicago, United States
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Fortune broke the news in New York, United States on Thursday, October 9, 2025.
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