America’s Most Vulnerable State Economies in 2025
Chief Economist Mark Zandi highlights growing pressures across 21 states and Washington, D.C., as job growth slows and economic uncertainty deepens.
Recent analyses by Mark Zandi, Chief Economist at Moody’s Analytics, warn that nearly one-third of the U.S. economy is either already in recession or at high risk of entering one. This raises concerns about a deeply complex economic landscape as both businesses and consumers continue to face mounting pressures.
Posting on platform X, Zandi stated that 21 states and Washington, D.C. are either already in recession or face elevated risks, while 13 states are “on the edge” and only 16 states still show growth.
New York and California—key indicators of U.S. economic health—remain relatively resilient, playing a critical role in preventing a wider downturn.
Recent government data underscores these concerns. The U.S. Commerce Department reported that GDP contracted in 39 states in Q1 2025, though the economy rebounded with a surprising 3% growth in Q2, providing only a temporary sign of relief.
U.S. Job Growth Slows, Recession Risks Rise
The labor market, however, shows worrying weakness: the U.S. added just 73,000 jobs in July, far below expectations. Zandi noted that job losses in government sectors in Washington, D.C., have sharply increased risks for the capital.
Geographically, the most vulnerable states are concentrated in the Northeast, Midwest, and parts of the South, while states like Texas, Florida, and Alabama remain in better shape, though even their growth is slowing.
Looking ahead, all eyes are on the upcoming August jobs report (due September 5), which may determine the trajectory of the U.S. economy in the months ahead. According to Moody’s AI-based models, the probability of a U.S. recession in the next 12 months stands at 49%, highlighting the scale of uncertainty surrounding the world’s largest economy.
