Moody’s Analytics has issued a stark economic warning: roughly two-thirds of U.S. states are either in recession, at high risk of entering one, or barely maintaining growth. Together, these states account for about 66% of the nation’s gross domestic product, signaling widespread weakness across the country.
The firm’s chief economist, Mark Zandi, identifies 22 states as already facing significant economic strain. That list includes some of the nation’s larger and more influential economies, such as Massachusetts and Washington. By contrast, only 16 states are still experiencing clear expansion.
Moody’s assigns about a 49% chance of a U.S. recession within the coming year, and it sees the economy as most vulnerable in late 2025. This elevated probability reflects weakening conditions across multiple regions and sectors rather than a problem confined to just a few states.
Several concerning trends underline the assessment. More than half of U.S. industries are now reducing payrolls, a broad-based sign of cooling demand. Recent revisions to employment data further amplify the worry: June’s job gains were revised down dramatically, from an initially reported 147,000 to just 14,000. That adjustment highlights the fragility of the labor market and the potential for headline figures to mask underlying softness.
Amid this general slowdown, healthcare remains one of the few sectors still adding workers at a meaningful pace. But the persistence of hiring in one industry is not sufficient to offset widespread job cuts elsewhere, and the overall employment picture points toward slower growth and elevated risk.
In sum, Moody’s Analytics paints a picture of an uneven and weakening U.S. economy. With a large share of states contributing little to growth and with labor-market indicators softening, the risk of broader economic contraction has risen, and policymakers and businesses may need to prepare for increased strain through late 2025.