Mark Zandi has been ringing the alarm bell for a recession in recent weeks, and now, he says one indicator has pushed the chances of a downturn to an “uncomfortably high” level.
The Moody’s Analytics chief economist in August described the US economy as being on the “precipice of recession.” Speaking with Business Insider shortly after, he reiterated his call, saying the economy was at the edge of a cliff.
Zandi’s newest prediction, though, may be his most dire. Over the weekend, he shared his latest take on concerning economic data in a series of X posts.
Citing data from Moody’s Analytics, Zandi said the risk of the US entering a recession in the next 12 months was 48%.
“It’s less than 50%, but historically, the probability has never gotten this high, and a recession has not ensued,” he wrote in his post.
To support this, Zandi provided further data on slumping residential building permits, considered an important indicator for recession forecasting.
While permits have held up until now, the number of unsold homes is rising because of weak buyer demand, causing builders to scale back. As Zandi noted, this has pushed new permits close to pandemic-era lows.
He added that August permit data was due to be released on Wednesday, the day of the next Federal Open Market Committee meeting, advising investors to watch the next report closely.
“They are sure to provide another reason why the Fed should and will announce a rate cut later that day,” Zandi predicted.
But he’s said previously that even if the Federal Reserve opts for the expected rate cut, it most likely won’t be enough to stave off a recession.