Zandi: The probability of a US recession in the next year is 49%.

Moody's Chief Economist Zandi continued to warn that downside risks to the U.S. economy are intensifying. Nearly a third of the states that account for U.S. GDP are already in recession, or highly likely to be in recession, while another third are stagnant and the remaining third are still expanding. According to Moody's machine learning model, the probability of the U.S. economy falling into recession in the next 12 months is 49%. While tax cuts and defense spending could boost the economy next year, Zandi said the current baseline expectation is to "narrowly avoid recession." He pointed to the end of this year and early next year as the most vulnerable period for the economy, when the inflationary impact of high tariffs and immigration tightening will peak, severely compressing real household income and consumer spending. Mr. Zandi also said he would not rule out follow-up data showing that the economy had started to contract, given that recent revised employment data were generally low.