Top economist Mark Zandi of Moody’s Analytics warned Monday that the U.S. is on the verge of a recession.
In a post on X, he cited last week’s weaker-than-expected jobs report and rising inflation, which could hinder the Federal Reserve’s ability to support the economy.
“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 come to the rescue,” he wrote.
Zandi noted that low unemployment is misleading, as labor force growth has stalled and the number of foreign-born workers is down. He pointed to a broad hiring freeze—especially for recent grads—and reduced hours worked as signs of a weakening job market. He also warned that Trump-era tariffs are straining household budgets and profits, while immigration crackdowns are tightening the labor supply.
“It’s no mystery why the economy is struggling; blame increasing U.S. tariffs and highly restrictive immigration policy. The tariffs are cutting increasingly deeply into the profits of American companies and the purchasing power of American households. Fewer immigrant workers means a smaller economy,” Zandi explained.
The Commerce Department reported Thursday that PCE inflation rose to 2.6% in June, up from 2.3%, exceeding the Fed’s 2% target. Fed Chair Jerome Powell has said the Fed will prioritize the mandate—2% inflation or maximum employment—that is furthest from its target. On Friday, the BLS reported the U.S. added just 73,000 jobs in July, far below the 110,000 estimate, and revised May and June job gains down by 258,000.
