“I don’t think the economy is in a recession, at least not on this point,” Zandi told the outlet. “But it feels like it’s on the edge, it’s in the abyss of this recession.”
Zandi was one of the first economists who warned of an approaching financial crisis before the 2008 crash.
In a Moody’s report from 2006 entitled “Housing at the turning point”He warned that a home could escalate in a more serious collapse.
He also emphasized that broader economic consequences – such as weakening employment, reduced consumer spending and an increased financial tension – could strengthen a recession.
Jobs that flash red
Zandi pointed to work as the most urgent warning signal – with job growth delayed to a “virtual stagnation”.
He said that most new positions are concentrated in health care, education and government sectors.
“That is the firewall between recession and no recession, are the low fired,” said Zandi. “So we are not in a recession, but I would say that the indicator that is redest is blinking is jobs.”
As soon as the monthly payroll administration becomes negative, “alarm bells must start to go off,” he added, saying that this could happen soon.
Rates and rising prices
The Trump administration has recommended strong gross domestic product growth, foreign investments and controlled inflation as proof that rates have strengthened the economy.
But Zandi believes that the same policy creates cracks.
“Prices are already rising, you can see it in the data, but it will rise to a certain extent that it will be impossible for people to ignore,” he said Newsweek. “They will clearly see it in the things they buy every day.”
Zandi has not chopped words about what he sees as the underlying cause of the delay.
“It is the rates and it is the restrictive immigration policy. Those two things do real damage to the economy,” he said.
The National Association of Homebuilders And other organizations asked earlier this year for a tariff exemption for building materials.
It is also possible that some of these measures can be included in new plans for Trump administration in the coming weeks that are aimed at tackling housing costs.
House weakness
Zandi described housing as “very worried” and warned that a building delay could deepen the recession risks.
“Single-family structure has been well up and running because builders have been able to use buy-downs and other incentives to keep the sale,” he said. “But that no longer works.
“The stocks of unsold houses are now so high as since then before the (worldwide financial crisis) and that bust of housing.”
Despite its grim warnings, Zandi emphasized that the US economy retains the strong points in the long term, in particular in technology.
“There is also a lot of structural that is true about the American economy,” he said, with reference to the tree in artificial intelligence as “real and important, very positive economic consequences.”
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