If you’re confused about whether the U.S. economy in a recession, near a recession or doing OK, you’re not alone.

Turns out the answer may depend on where you live, according to Moody’s Analytics economist Mark Zandi.

Twenty-one states and the District of Columbia, which contribute about a third of U.S. economic activity, are already in a recession, his analysis shows. Another 13 states, comprising roughly another third of the economy, are treading water, and the remaining 16 are growing, he said.

Even if the nation isn’t in a recession, if you live in one of the states that’s either in a recession or on the edge of one, you’re probably already feeling a pinch.

“State-level data makes it clear why the U.S. economy is on the edge of recession.” Zandi said.

Why are some states in or near recession?

Most of the states in or near recession produce goods, Zandi said. Agriculture, mining and light manufacturing are frail, and a weak transportation sector is exacerbating that, he said.

But the “DC area stands out due to government job cuts,” Zandi said. The federal government is one of six industries he sees in recession. Others include transportation and distribution, agriculture, mining, manufacturing and construction.

“No surprise those industries struggling the most are most impacted by the higher tariffs, highly restrictive immigration policy, and the DOGE (Department of Government Efficiency) cuts,” he said.

New England states generally tend to have weaker economies than the rest of the country, even in the best of times, because of slow population growth, Zandi said.

A few states like Georgia and Illinois are also expensive to live in, which has hindered an increase in population, he said.

What’s propping up other states?

States like Texas and Florida generally always fare well, partly because of their low taxes, Zandi said.

Pennsylvania surprised him on the upside. “It’s doing well because of health care and education,” he said. “Philadelphia and Pittsburgh are driving the train.”

Other growing industries include technology, state and local government and real estate, he said.

Why are California and New York the states to watch?

California and New York have staved off recession but they’re walking the line, Zandi said. If either one falls into recession, Zandi predicts, it’ll take the rest of the nation with it.

Together, the two states account for more than a fifth of U.S. economic growth. “Their stability is crucial for the national economy to avoid a downturn,” he said.

What are the chances of recession in the United States?

Most economists don’t expect a full-blown recession, defined by the National Bureau of Economic Research as a significant decline in economic activity spread across the economy and lasting more than a few months. The bureau is the official arbiter of when a recession occurs.

Zandi also said he expects to avoid a national recession, but only by a whisper. “Fiscal and monetary policy should help and win the day,” he said.

But just missing a recession isn’t likely to feel good to many Americans, he said.

“The firewall is layoffs,” Zandi said. “They remain very low. As long as they stay low, it should be fine but uncomfortable because companies have stopped hiring, cut hours. They’re doing everything but layoffs, and it’ll be uncomfortable until hiring resumes.”

With 70% of the country now in or nearing recession, Americans are already feeling gloomier. The University of Michigan’s survey of consumers showed sentiment dropped in September from the prior month “across a broad swath of the population, across groups by age, income, and education. …Consumers feel pressure both from the prospect of higher inflation as well as the risk of weaker labor markets.”

Is the economy out of the woods?

After stronger-than-expected economic growth of 3.8% in the April to June period, most economists revised their outlook up. Wells Fargo economists said strong consumer spending continues to support the economy.

But Zandi still sees a precarious situation with many risks lurking that could flip the economy. He said they include:

  • Whether the government shutdown, in its second week, continues for a month or two.
  • Big AI companies see revenue slow.
  • People don’t like Trump’s nomination to replace Fed Chair Powell next year.
  • Countries retaliate against U.S. tariffs.
  • Inflation balloons if the Fed cuts rates too aggressively.

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

This article originally appeared on USA TODAY: Feel like you're in a recession? It could be where you live, economist says.

Reporting by Medora Lee, USA TODAY / USA TODAY

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