Zandi, chief economist at Moody’s Analytics, shared his concerns in a recent thread on social media X (formerly Twitter), laying out what he believes are the most telling red flags, according to the Business Insider report. While the economy hasn’t yet met the technical definition of a recession, two consecutive quarters of negative GDP growth, Zandi argues that subtler but significant cracks are beginning to show, as per the report.
Payroll Employment Growth Is StallingAt the top of Zandi’s list is payroll employment, which he says is the most critical measure used by the National Bureau of Economic Research (NBER), the official authority that declares when recessions begin and end, as reported by Business Insider.Zandi wrote that “While they look at a plethora of data to make this determination, most importantly, far and away, is payroll employment,” and highlighted that if employment falls for more than a month consecutively, the economy has entered a downturn, according to the report.
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So far, employment numbers haven’t declined, but Zandi notes that growth has nearly stalled since May, as per the Business Insider report. In fact, recent revisions to job reports have consistently been revised lower, raising concerns that the initial data may be painting too rosy a picture, according to the report.
The economist said, “Given that the recent revisions to the jobs numbers have been consistently lower, much lower, it wouldn’t be surprising if we learn with the coming revisions that employment is already declining,” as quoted by Business Insider.
Over Half of US Industries Are Cutting JobsThe second red flag Zandi is watching is how many industries are shedding jobs, as per the report. Historically, when more than 50% of the 400 industries tracked showed a decline in employment, it has been a reliable indicator that a recession is underway, as per the Business Insider report.
That threshold has already been crossed, Zandi cited the recent data that has revealed that in July 2025, more than 53% of industries reported job cuts, with only the healthcare sector showing employment growth, as reported by Business Insider.
Unemployment Rate Losing Its Predictive PowerThe other signal Zandi points to is the unemployment rate but not because it’s spiking, but instead he argues that it’s become less reliable as a recession gauge, according to the report.
The economist said, “But, unemployment is a lagging indicator and given that the labor force has gone sideways this year as the number of foreign-born workers is declining, unemployment will be a particularly poor barometer of recession,” as quoted by Business Insider.
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US Recession Isn’t Official Yet, But the Trend Is WorryingFinally, Zandi concluded saying that the US economy is still not in a recession, with respect to the job decline factor, according to the report. He explained that, “A recession is defined by a persistent decline in jobs — the decline lasts for at least a few months,” adding, “We aren’t there yet,” as quoted in the Business Insider report.
FAQs Is the US currently in a recession?
No, not yet, but Zandi believes that the US is very close based on labor market trends.
What’s the technical definition of a recession?
Two consecutive quarters of negative GDP growth, although other indicators also matter.