The chief executive of the credit ratings firm Moody’s is warning that two headlines are likely to keep the US economy subdued in the coming months.
In a new CNBC Television interview, Moody’s Mark Zandi says that both rising inflation and Trump’s immigration policies will lead to muted economic growth in the next year.
-->While Zandi doesn’t expect an economic recession, he warns that consumers will have to struggle with an increase in prices of goods and services due to Trump’s tariffs.
“The Fed’s been cautious sitting in its hands because it just doesn’t know what to do with the tariffs. And we haven’t really seen the real economic consequences of the tariffs yet, but it’s in train. It’s coming. You can see it in the data. Inflation is picking up, and it is on the high side of what I think people would feel is comfortable. And the direction of travel here is pretty disconcerting. So as prices rise, as we get more of the tariffs translating through to the higher prices, that’s going to undermine or weaken the real purchasing power, and people’s real incomes are going to come under pressure. That’s going to weigh on consumer spending, which is already kind of punk.
And I think that argues for an uncomfortable economy. Can we make our way through without recession? Yeah, with a little bit of luck. I think we can do it, but it’s going to be very, very uncomfortable here over the next six -12 months.
We haven’t seen the real economic consequences of this policy yet, but it’s in train, and by the way, it’s not just tariffs. It’s the immigration policy, which the brunt of that is being borne by the labor market. And it’s not at all unlikely that we’re going to start seeing some job loss simply because there’s no labor force out there. So it’s both policies: tariffs and immigration.”
Despite Zandi’s warning, data from the U.S. Bureau of Economic Analysis show that real GDP grew at an annual rate of 3.3 in Q2 2025 after the metric witnessed a 0.5 decrease in Q1 of this year.
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