Is The US heading Toward A Slowdown? Moody’s Says Recession Risk At 48%

Mumbai: Credit rating agency Moody’s has said the chances of a US recession have risen to 48 percent, the highest level since 2020. The warning comes after weak job data and a record payroll revision of –9,11,000 jobs. Moody’s said such big payroll changes are usually a serious signal for future growth slowdown.

What Economists Say

Moody’s Analytics Chief Economist Mark Zandi noted that the US economy is currently being supported by high spending from the wealthy. He explained, “As long as the rich keep spending, the economy may avoid a recession. But if they reduce their spending for any reason, there will be a big problem.”

Wealthy Driving Consumption

According to Bloomberg, the top 10 percent of income earners accounted for 49.2 percent of total consumption in the second quarter of this year, up from 48.5 percent in the first quarter. This is the highest share since records began in 1989.

Fed’s Concerns

The warning also comes as the US Federal Reserve flagged employment risks and high inflation. The Fed has recently cut its benchmark interest rate by 25 basis points, bringing it down to 4.0–4.25 percent.