While official figures show America’s economy growing at a robust pace, a number of states are currently teetering on the edge of an economic downturn, according to Moody\u2019s Analytics chief economist Mark Zandi.<\/p>\n
In a recent analysis<\/a>, Zandi said that 22 states alongside Washington, D.C.\u2014which together represent almost a third of America\u2019s GDP\u2014are currently in or at high risk of entering a recession<\/a>.<\/p>\n \u201cThese regions, spread across every part of the country, are showing signs of strain,\u201d he wrote. \u201cAnother third of states are treading water, while the rest are still growing, though their momentum is fading.\u201d<\/p>\n Why It Matters<\/strong><\/p>\n Stronger-than-anticipated GDP growth in the second quarter has tempered some fears over an imminent recession in the U.S., and the administration maintains that any disruptions caused by tariffs<\/a> will soon pave the way for a period of significant economic expansion. To economists like Zandi, however, the country still remains at high risk of entering a downturn, with inflation, softness in the labor market and noticeable declines in consumer confidence weighing on their forecasts.<\/p>\n What To Know<\/strong><\/p>\n Zandi\u2019s analysis serves as an update to a general economic assessment he published in August<\/a>, at which point he found that 21 states and the nation’s capital, were either in a recession or at high risk, 13 could be classified as \u201ctreading water\u201d and 16 were growing.<\/p>\n The sole change since his original report is Michigan<\/a>, which has shifted from the \u201ctreading water\u201d category to join 21 others now considered in dire economic straits.<\/p>\n Recessions are often diagnosed by two consecutive quarters of negative GDP growth. The U.S. economy<\/a> expanded at an annual rate of 3.8 percent in the second quarter, according to the Bureau of Economic Analysis (BEA), and GDP increased in 48 states during this period.<\/p>\n However, Zandi has told Newsweek his “subjective” assessment is based on a number of \u201ccoincident measures of economic activity,\u201d and employs a methodology similar to that used by the National Bureau of Economic Research (NBER), the nonprofit research group which retroactively dates U.S. recessions.<\/p>\n \u201cThe most important data include payroll and household employment, unemployment, a measure of industrial production, personal income, retail sales, and building permits,\u201d Zandi wrote in Wednesday\u2019s analysis. \u201cOther data that is used in this assessment include unemployment insurance claims, migration flows, household credit growth and delinquency rates, house prices, Fed surveys, and state tax revenues.\u201d<\/p>\n He added that the Washington, D.C.’s economy has been \u201cstruggling the most\u201d as a result of federal job cuts and furloughs.<\/p>\n Texas<\/a>, one of the nation\u2019s economic powerhouses, continues to expand, while California<\/a> and New York<\/a> are still defined as \u201ctreading water.\u201d In an interview with Newsweek<\/a> following his August report, Zandi said that the fate of these two states\u2019 economies \u201cmay decide what happens to the nation.\u201d<\/p>\n \u201cIf California and New York weaken and start to contract, the national economy is going to go into recession,\u201d he said. \u201cAnd if those economies hold their own or start to accelerate or reaccelerate, the economy is going to be fine and get through without recession.\u201d<\/p>\n