Economic Vulnerability Spreads: Mark Zandi Warns One-Third of U.S. Economy at Risk

The broader U.S. economy remains technically stable, but a troubling pattern is emerging at the regional level. According to chief economist Mark Zandi from Moody’s Analytics, approximately 22 states are now experiencing or approaching recession conditions—a phenomenon that deserves far more attention than it currently receives.

The Interconnected Nature of Regional Economic Decline

Zandi’s recent assessment reveals that recession risk is far from isolated to struggling industrial regions or economically fragile areas. Instead, the threat spans geographically and economically diverse states across the nation. The data tells a sobering story: states representing roughly one-third of total U.S. GDP are either actively contracting or facing heightened recession vulnerability, while another third are merely maintaining status quo rather than showing growth.

“State-level economic data reveals the fragility of the national situation,” Zandi explained in his market analysis. “The evidence suggests we’re standing at a critical juncture.”

Regional Patterns Emerging Across the Country

The economic slowdown isn’t uniform—some areas display more resilience than others. The Washington D.C. metropolitan region faces particular headwinds due to ongoing federal workforce reductions. Meanwhile, Southern states have historically demonstrated greater economic strength, though their expansion is noticeably decelerating. Two economic powerhouses—California and New York—together represent over 20% of national GDP. Their current stability serves as a crucial buffer against broader national economic contraction, though even these giants are showing signs of slower momentum.

The 22 States Facing Economic Pressure

According to Zandi’s analysis, these states are either in recession or experiencing high recession risk. Listed by relative economic strength (strongest to weakest):

Wyoming, Montana, Minnesota, Mississippi, Kansas, Massachusetts, Washington, Georgia, New Hampshire, Maryland, Rhode Island, Illinois, Delaware, Virginia, Oregon, Connecticut, South Dakota, New Jersey, Maine, Iowa, West Virginia, and the District of Columbia.

Why This Matters for the National Picture

The combined economic output of these 22 states represents a substantial share of American GDP. Should these regional pressures intensify rather than stabilize, the nation could transition from an economy “on the edge” to one firmly in recession. The interconnected nature of modern commerce means that regional economic deterioration creates downward pressure throughout supply chains, consumer spending patterns, and employment markets nationwide.

The question facing policymakers and investors isn’t whether regional weakness will matter—it already does. The more pressing question is whether these warning signals can be addressed before they cascade into national economic contraction.