The intensification of economic differentiation in the United States: Risk of recession, weak employment, and future challenges

Recently, Mark Zandi, Chief Economist of Moody's Analytics, issued a strong warning about the US economy. He pointed out that about one-third of the state economies in the United States have fallen into recession or are at high risk of recession, another third are stagnant, and only the remaining third are expanding. This stern warning reflects the instability of the US economy, especially in terms of the job market, industry performance, and the speed of economic growth, with multiple signals indicating that the US economy is at a crossroads.

The US Economy: Recession, Stagnation, and Expansion

According to Zandi's analysis, about 22 states' economies have fallen into recession or are at high risk of recession. These states include Wyoming, Montana, Minnesota, and others, whose slowing economic growth may further trigger a negative cycle of employment and consumption. Thirteen other states, such as Missouri, Ohio, and Alaska, are experiencing stagnation as their economies lack momentum and face sluggish growth. Only 16 states are experiencing economic expansion, while the economies of South Carolina, Texas, and Florida remain active, driving the overall economic growth of the country.

This differentiated economic situation reveals the uneven economic performance among regions in the United States, especially in some traditionally strong states such as California and New York, which still perform well. Their stability is crucial for the overall economy of the United States. However, the slowdown in economic growth in some states in the southern and central western regions highlights structural issues in the US economy.

The job market and layoffs

Zandi's warning not only focuses on the performance of state economies, but also specifically points out abnormal fluctuations in the job market. The non farm payroll data in the United States has shown a significant decline, especially in the past few months where the growth rate of non farm jobs has been significantly lower than expected. For example, in July, non farm employment only increased by 73000, far below the expected 100000. This low growth trend compared to last year has already shown signs of fatigue in the job market.

What is even more worrying is the intensification of layoffs in multiple industries. More than 50% of industries have experienced layoffs, a situation historically associated with economic downturns. According to Zandi's analysis, the signs of economic contraction in the United States are very obvious, especially the increase in layoffs in the manufacturing, technology, and financial industries, indicating that these industries have already felt the pressure of economic slowdown. Although there has been an increase in employment in the healthcare industry, it is not enough to offset the wave of layoffs in other industries.

The risk of economic recession

Zandi also mentioned that based on machine learning models, the likelihood of an economic recession in the United States within the next 12 months is 49%. Although tax cuts and defense spending may drive economic growth next year, the effects of these measures are slow to show and cannot immediately reverse the current economic difficulties. More importantly, due to inflationary pressures and declining consumer confidence, the economy may face the risk of further recession by the end of this year and early next year.

In addition, Zandi specifically mentioned that the government's policy changes, especially the increase in tariffs and tightening of immigration policies, will have a serious impact on household income, thereby hitting consumer spending. The reduction in consumer spending will further drag down economic growth, especially in the US economy where consumption accounts for a large proportion of GDP.

Overall outlook

Although Zandi believes that the US economy has the potential to avoid a comprehensive recession, this does not mean that the economy will recover quickly. The recovery of the US economy faces multiple challenges, ranging from global economic uncertainty to internal fiscal and employment pressures, all of which may become stumbling blocks to economic growth.

For ordinary people, this means that the economic environment in the United States may become more volatile in the foreseeable future. Household spending and consumption patterns may change, and rising unemployment rates may become a norm. At the same time, the differential performance of different industries and regions may also exacerbate social inequality, especially in economically fragile states that may face greater challenges.

Overall, the US economy is currently in a period of uncertainty, with the interweaving of various factors making the economic outlook challenging. Although a comprehensive recession may be avoided in the short term, long-term economic recovery still requires joint efforts from policies, markets, and consumers. In this context, governments, businesses, and households all need to be fully prepared for potential economic fluctuations.