Recession Looms: US Economy Flashes Warning Signs Ahead of 2025

According to a recent analysis, the US economy may be headed for a recession in 2025. Mark Zandi, the chief economist at Moody's Analytics, has identified a range of warning signs that suggest the country is inching dangerously close to an economic downturn.

Zandi's analysis points to weakening consumer spending, a cooling labor market, and a slowdown in key industries as the primary indicators of the impending recession. He notes that consumer spending, which drives about two-thirds of the US economic output, has flatlined, raising serious concerns. Additionally, the construction and manufacturing sectors are contracting at an alarming rate.

While the official unemployment rate remains low, Zandi highlights that the underlying issues are more complex. The workforce is shrinking, with fewer hours worked and growing difficulty for new graduates to find jobs. Hiring freezes are becoming widespread, and the once-strong demand for labor is cooling, suggesting that employers are bracing for tougher times ahead.

Zandi also points to the impact of restrictive immigration policies, which have led to a shrinking foreign-born workforce, a key contributor to the economic slowdown. He warns that "Tariffs are eroding corporate profits and household purchasing power," further exacerbating the economic challenges.

Despite the dark outlook, the prediction market platform Kalshi has found that the odds of a US recession have fallen to 14%, down from a high of nearly 70% on May 1. However, Zandi and other economists remain concerned about the underlying risks facing the US economy.