Recession odds spike after key economist declares U.S. "On the precipice of recession"

Recession odds have quickly spiked early this week after notable economist Mark Zandi made a controversial warning to fellow economists, politicians, and the public that dismissing the probability of a recession is inherently false.

Mark Zandi, Chief Economist at Moody's Analytics.

According to Polymarket, recession odds increased by 6% from a low of 10% in late July to a high of 16% today, August 5th after the remarks of the renowned economist.

Mark Zandi has, for the past three decades, been a very involved economist throughout several turbulent events, from the black swan 2008 recession to the 2020 COVID-19 pandemic economic downturn. Zandi was amongst the first economists to predict the 2008 recession, and accurately predicted that a recession would not happen in 2023, when market sentiments proved otherwise as a result of rampant inflation, but rather admitted a "slowcession," which did indeed occur. The economist also connected the 2020 pandemic economy to 2008 as an outlier in a sea of experts who tried to downplay the economic impacts of the disease at the time.

On X (formerly Twitter) this Sunday, Zandi made a post declaring that the United States was "on the precipice of recession," arguing that "That’s the clear takeaway from last week’s economic data dump. Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall. And with inflation on the rise, it is tough for the Fed to come to the rescue." His last sentence there is especially important, as it downplays even attempts by the Trump administration to prevent economic downturn by calling for rate cuts. Now, according to Zandi, rate cuts could not prevent what is going to happen.

Mark Zandi's thread of X posts.

Zandi cited the clear cause of a possible recession to be "increasing U.S. tariffs and highly restrictive immigration policy. The tariffs are cutting increasingly deeply into the profits of American companies and the purchasing power of American households. Fewer immigrant workers means a smaller economy." His posts received a number of attention online, with a combined 400k+ views having been accumulated by the Moody's economist.

Specifically in regard to his second point about the labor market, the Trump administration fired the chief of the Bureau of Labor Statistics (BLS) over "data integrity concerns," however with the true motive being an adjusted jobs report from June bringing job growth from 150,000 (previously reported) to just 14,000.

In the comments section of the post, X user Matt Stevens replied "It seems employment is struggling in all areas, even where new immigration policy should have little/no impact (college grads)... Economy sucks because people are out of money. They are out of money due to years of inflation, caused by government money printing - which continues." Although a different rationale, it also has some validity as inflation pressures have prevented millions of Americans from affording necessities for the past few years, even while the Trump administration touts a booming economy.

Peter Berezin, an analyst from BCA Research, was published on a Business Insider article stating that he predicts a 60% chance for a recession in the next year, arguing that the current artificial intelligence boom is not likely to entirely prevent a recession.