Moody's Analytics chief economist Mark Zandi cautioned that the recently reported strong GDP growth of 4.3% is misleadingly fragile, as it is not supported by meaningful job growth. While celebrating low layoffs as positive, he emphasized that the absence of hiring and a rising unemployment rate create a vulnerable economic foundation. Zandi warned that without job creation, any minor pullback by consumers could trigger job losses and potentially lead to a recession, outweighing the positive GDP figure.
Highlights:
⚠️ Fragile Growth: The 4.3% GDP growth is described as "fragile" because it lacks the crucial support of job creation.
📉 Job Market Stagnation: The core concern is flat or negative job growth. Businesses are not laying off workers, but they are also not hiring, leaving the economy vulnerable.
🔑 Jobs are Key: Zandi stressed that job creation is the real indicator of economic health, more so than a single GDP figure.
🔄 Rising Unemployment: Despite a low headline rate, the unemployment rate is rising and is higher than optimal estimates, accompanied by slowing wage growth.
⏸️ Consumer-Led Risk: The economy is in a precarious position where any slight pullback in consumer spending could quickly lead to job losses and start a downward cycle.
🎯 Future Uncertainties: Zandi pointed to major 2026 risks on both sides:
Upside: Potential fiscal stimulus or a Supreme Court ruling against tariffs.
Downside: The disruptive impact of Artificial Intelligence, which could either cause significant job losses from a productivity boom or trigger a market correction if its potential is overstated.
