Thirteen states find themselves in stagnant conditions, including economic powerhouses New York and California. “California and New York, which together account for over a fifth of US GDP, are holding their own, and their stability is crucial for the national economy to avoid a downturn,” Zandi noted.
The strongest performance appears concentrated in the South, with 16 states continuing expansion, including Texas, Florida, North Carolina, and South Carolina. However, Zandi cautioned that “Southern states are generally the strongest, but their growth is slowing.”
Employment data raises concerns
Recent employment figures have intensified recession fears. Payroll expansion reached only 73,000 jobs last month, falling short of forecasts for approximately 100,000 new positions. More troubling for economists, previous months saw significant downward revisions, with May’s initial count of 144,000 jobs revised down to just 19,000, and June’s figure slashed from 147,000 to 14,000.
The three-month average job gain now stands at only 35,000 positions, a figure that has historically preceded economic downturns. Zandi pointed to industry-wide job losses as another warning signal, explaining that “in the past, if more than half the ≈400 industries in the payroll survey were shedding jobs, we were in a recession.”
“In July, over 53% of industries were cutting jobs, and only health care was adding meaningfully to payrolls,” Zandi said.