Despite robust national indicators — 3.8% GDP growth and 4.3% unemployment — large parts of the U.S. are effectively in recession, according to a new analysis from Moody’s Analytics.
Twenty-two states, including Wyoming, Montana, Minnesota, Mississippi, Kansas, Massachusetts, Washington, and the District of Columbia, are either in recession or on the brink of one. Together, these states account for roughly one-third of the nation’s total GDP.
Moody’s chief economist Mark Zandi said that while employment remains stable, many lower- and middle-income households are “struggling under heavy debt and slowing wage growth.” Private data collected during the ongoing federal shutdown also show waning consumer confidence, particularly among Americans earning less than $35,000 a year.
Zandi warned that if the slowdown spreads from smaller manufacturing states to major economies like California and New York, the entire U.S. could slide into a nationwide recession.
Moody’s attributed the downturn to slower immigration, rising tariffs, and federal layoffs. Economist Michael Szanto noted that the Trump administration’s high-tariff policies have created “a painful lag effect,” pushing average U.S. tariff levels to their highest point in 50 years.
Compounding the slowdown, U.S. businesses’ hiring plans last month fell to their lowest level since 2009. Employers announced only 205,000 new job openings in the first nine months of 2025 — a 58% drop from the same period last year.
