US ‘on precipice’ of recession – Moody’s

Donald Trump’s tariffs and immigration policy are pushing the American economy toward a downturn, the agency’s chief analyst has warned

US President Donald Trump’s tariffs and immigration policy are pushing the economy toward a downturn, Moody’s chief analyst, Mark Zandi, has warned. He described the US as “on the precipice” of a recession.

The warning followed a Bureau of Labor Statistics report showing the US added an average of just 35,000 jobs a month from May to July – less than a third of last year’s pace and the weakest since 2020. Experts say the slowdown signals weakening economic growth. Other indicators have also been bleak: June consumer spending rose only 0.1% after inflation, prices climbed 2.7% year-on-year – the highest since February – and factory activity contracted for the fourth straight month as orders and jobs fell.

“The economy is on the precipice of recession. That’s the clear takeaway from last week’s economic data dump,” Zandi wrote on X on Sunday. “Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall.”

He warned that inflation above target leaves the Federal Reserve little room to revive growth, especially under Trump’s policies.

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“It’s no mystery why the economy is struggling; blame increasing US tariffs and highly restrictive immigration policy,” Zandi stated. “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.”

Since returning to office, Trump has tightened restrictions on illegal immigration, planning to deport 4 million people over four years – a move many warn will trigger severe labor shortages. He has also imposed tariffs on hundreds of US trade partners, framing them as a “reciprocal” strategy to secure better trade terms, protect jobs, revive manufacturing, cut deficits, and fund tax relief.

Zandi is not alone in warning of the risks. Fed Chair Jerome Powell has cautioned that tariffs could sharply raise both inflation and unemployment. The Economic Policy Institute estimated that Trump’s mass deportations plan could destroy nearly 6 million jobs. Trump’s alma mater, the University of Pennsylvania’s Wharton School, warned that deportations would shrink most worker paychecks, cut GDP, and further swell the already massive federal budget deficit.