PHOENIX — A new analysis from Moody's Analytics reveals the United States economy is experiencing uneven growth patterns, with nearly half of all states either at risk of recession or already experiencing economic downturns.
The research divides the country into three distinct economic categories: 22 states plus Washington D.C. are in recession, 12 states are treading water, and 16 states, including Arizona, continue to show economic growth.
The recession-affected states are mostly smaller economies, with Illinois being the largest among them. The treading water category includes bigger economic players, with California alone representing 14% of national GDP. Arizona falls into the growing states group, which is led by Texas.
Local economist Jim Rounds said he mostly agrees with Moody's assessment but believes it's premature to declare a full recession.
"You have to compare it with the overall US data as well. And the US data isn't at the point where it's indicating we're in a recession, but the employment numbers and some of the other variables that are important are indeed weakening," Rounds said.
The data shows significant variations in economic performance since the pandemic. While U.S. GDP has grown 13% overall, individual states show markedly different trajectories.
Michigan, categorized as a recession state, has grown four percentage points below the national average. Colorado, in the treading water category, has actually beaten the U.S. rate by two percentage points. Arizona, considered a growing state, has far surpassed others with growth five percentage points higher than the national average.
Employment growth patterns mirror the GDP trends. Jobs have grown 12% nationally, with Michigan showing only 11% growth, Colorado matching the national rate at 12%, and Arizona exceeding expectations at 12.5%.
Despite these classifications, the margins between economic categories remain relatively narrow. The difference between states labeled as growing versus those in recession often comes down to small percentage point variations in key economic indicators.
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