The U.S. economy is teetering on the edge of recession, and the next few weeks could determine whether it tips over, according to Mark Zandi, chief economist at Moody's Analytics. Speaking at the National Investment Center for Seniors Housing & Care (NIC) Spring Conference in Nashville, Zandi said these are "troubled and uncertain times" and that in his 36 years as an economist, he's rarely been less sure about the outlook.
"There haven't been many times when I've been this unsure about where things are headed," Zandi said, citing moments like Y2K, September 11, the global financial crisis, the pandemic—and now, this period of economic turbulence.
Zandi attributed much of today's economic uncertainty to rising oil prices and geopolitical instability.
"This is self-inflicted because of the choices the administration is making; it is all over the place," he said, pointing to elevated energy costs. Oil prices have jumped from roughly $60 to over $100 a barrel.
"When everything in the world is at an equilibrium, $60 a barrel is a fair price," he said.
"There is no economic upside to the war," Zandi added. "The only question is to what degree it will hurt the economy."
Those higher prices are rippling through the economy, driving up costs for plastics, rubber, groceries, fertilizer, semiconductors, aluminum and diesel fuel—which now costs even more than gasoline. Consumers are noticing, Zandi said. Inflation currently sits between 2.5% and 2.8%, while the Federal Reserve's preferred measure, the PCE index, stands at 3% and is projected to climb as high as 4.2%.
"Right now, we're in the spirit of stagflation, but it's not like it was during the 1970s when both figures were in double digits," Zandi said. "We'll get to the other side of this. We just don't know when. But if nothing improves over the next month or so from now until early May, then we're heading into a recession."
Despite the broader uncertainty, Zandi highlighted one bright spot: seniors housing. The sector is poised for growth as the first Baby Boomers turn 80 and demand accelerates. According to NIC MAPS data, the U.S. will need 560,000 new senior housing units by 2030, but is on track to deliver only about 190,000.
"Housing developers are waiting at least six months or maybe a year before they return to building," Zandi said. "They are in a risk-off environment. We need clarity on things. No one can speak with confidence. Everyone is sitting on their hands, including the Federal Reserve, just like it did when the tariffs were announced."
Beyond housing, Zandi warned that three key measures of federal debt show troubling signals.
"We as a country don't have the fortitude to address it," he said. "We need an event of some urgency for action to address it. I don't know when that date will be or what the catalyst will be." Such fiscal strains, he added, could push interest rates even higher.
Meanwhile, the uneven recovery continues to reshape consumer spending. Zandi described a "K-shaped" economy with widening wealth gaps. "It's a skewing of the wealth markets. Sixty-five percent of people own their homes, and 33% own stock," he said.
"The top 10%, the top 1%, and the top .1% are more skewed than ever. This is affecting the distribution of spending. The top 20% account for 60% of spending, and the bottom 80% account for 40%. In the 1990s, it was closer to a 50-50 split."
Finally, Zandi reflected on the promise and limits of the latest wave of technology.
"The AI revolution is a valuable and important component of the world economy, much like that of other technological events like the Internet," he said. "But if you're not a subject-matter expert, AI isn't going to help you. You need to know what to ask. It's not going to answer and solve everything for you."
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