Moody's Zandi Sees 40% U.S. Recession Risk as Income Growth Stalls at 0%
Updated
Updated · Fox Business · May 20
Moody's Zandi Sees 40% U.S. Recession Risk as Income Growth Stalls at 0%
1 articles · Updated · Fox Business · May 20
Mark Zandi put the chance of a U.S. recession within the next year at 40%, far above the roughly 5% historical average, saying the economy is "close to the edge."
0% year-over-year growth in real disposable income underpins that warning, with after-tax, inflation-adjusted purchasing power flat and lower- and middle-income households increasingly living paycheck to paycheck.
Fresh stock-market highs do not change that view, Zandi said, arguing equities are being driven mainly by AI-linked hyperscalers and chipmakers rather than broad economic strength.
Valuations now look stretched outside the dot-com era, he said, while investors also appear to be betting President Donald Trump would shift policy to cushion markets or the economy if a correction starts.
That gap between Wall Street and household finances leaves the market "disjoint" from the economy, Zandi warned, raising the risk that weaker consumers eventually catch up with asset prices.
As American purchasing power stagnates, what is the first sign the 'razor's edge' economy will tip into recession?
With AI's growth fueled by trillions in debt, is the tech market building a new economy or an unsustainable bubble?
Can policy interventions shield the U.S. economy from global oil shocks, or do they merely delay an inevitable reckoning?
U.S. Recession Risk Nears 50%: Inflation, Stagnant Wages, and Policy Uncertainty Squeeze the 2026 Economy
Overview
As of May 2026, the U.S. economy is walking a precarious tightrope, with leading economists and financial figures warning of a sharply elevated recession risk. Moody's has issued a 49% recession probability, pointing to rising oil prices and troubling jobs data as key drivers. This caution is echoed by major investors like Paul Tudor Jones, who compares the current market to 1999, and Warren Buffett’s Berkshire Hathaway, which is holding a record $397.4 billion in cash as a sign of market caution. These signals highlight growing uncertainty and the need for careful economic navigation.