Top economist warns US economy is flashing a key warning signal

Moody's chief economist Mark Zandi warns that while GDP has risen this year, the economy is growing below its potential and the situation is tenuous. He cautions that unless growth picks up, unemployment will rise, labor-force participation will fall, and those shifts could eventually undercut growth altogether.

Zandi has pointed to Donald Trump’s tariff and immigration policies as weighing on the outlook and said the economy was on the edge of recession in 2025. He acknowledges the economy has held up despite those headwinds, but notes consumer prices — particularly fuel costs pushed higher by the Iran war — have surged and will offset some benefits of the administration’s tax cuts.

The soft job market is dragging on wage growth, and with inflation accelerating, real wage growth has all but stalled; real disposable income has not grown over the past year.

United States

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