Mark Zandi, Moody's Analytics chief economist, opines that the US economy is on the verge of a recession.
In an interview with Business Insider, Zandi identified a mix of policy errors and speculative market activity, such as the run-up in meme assets such as Dogecoin (DOGE), as being major contributing factors to the slowdown.
“The reason why the economy is on the precipice of recession is policy,” Zandi said. “If we go into recession, just how deep and long the recession will be will be because of policy.”
Zandi cited US President Donald Trump's tariffs, immigration restrictions, and recent Federal Reserve actions as key headwinds in an interview with Business Insider. He believed that these factors have generated uncertainty and caused businesses to postpone hiring and investment. "I think the slowdown in growth and the acceleration of inflation is due entirely to economic policy," he explained.
Zandi also condemned reductions in the Department of Government Efficiency, saying it has contributed to economic drag. In spite of all these fears, he does not see the economy as being in official recession yet, although sections like construction and manufacturing are already demonstrating signs of slackening pace.
He cautioned that consumers have not yet seen the full brunt of tariffs, but the consequences are coming. "They're slowly but yet still being passed through, and that'll become vividly clear in the next few months," he stated. Zandi further stated that higher prices could put pressure on household budgets and curb consumer spending.
According to the Business Insider article, Zandi explained that a recession would probably result in a sustained slowdown in job growth for a few months. He also warned that possible rate reductions would ease the pain: "It'll help cushion the weakening of the economy, but it won't stop it."
For investors, Zandi forebodingly described: "In a recession, no asset class is safe." He went on to say that increasing tariffs could even erode the time-honored safe-haven reputation of US Treasurys and the dollar, which have been regarded as cornerstones of world financial stability.
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