Recession Concerns Increase As Job Growth Slows

The risk of a recession in September 2025 is elevated, with analysts citing a combination of slow job growth, persistent inflation, and rising tariffs as key factors pushing the U.S. economy toward a downturn. Some, like Moody’s Chief Economist Mark Zandi, suggest the U.S. is “on the precipice” of a downturn, with the period of greatest vulnerability potentially lasting from late 2025 into early 2026. Others, such as Oxford Economics, see a lower but still increased chance of recession compared to a normal year.

Factors increasing recession risk include:

Slowdown in the Labor Market:

Job growth is slowing, and layoffs are increasing. A sharp jump in the unemployment rate would be a strong indicator of a brewing recession.

Persistent Inflation:

Inflation continues to be a concern, adding price pressure on consumers.

Trade Pressures:

Tariffs and other policy shifts are contributing to price pressures and slowing economic growth.

Weak Consumer and Business Sentiment:

Consumers are feeling the squeeze from higher prices, and employers are expressing concerns about tariffs and federal spending cuts.

Economists are offering differing forecasts:

Moody’s Analytics (Mark Zandi):

Places the U.S. on the “precipice” of a downturn, with the economy being most vulnerable from late 2025 into early 2026, with nearly 50-50 odds of a recession.

Oxford Economics:

Forecasts a 35% chance of recession in the next year, which is significantly higher than the typical baseline 15% chance for any given year.

PNC Economists:

Expect the labor market to slow with weaker job growth and a slightly higher unemployment rate, though they do not see a full recession as the most likely outcome in the short term.

J.P. Morgan:

Had initially increased its U.S. recession probability to 60% for 2025 but later reduced it to 40%.

What to Watch For:

• GDP Contraction:A measurable decline in the overall economic output.
• Yield Curve Inversions:A situation where long-term government bond yields are lower than short-term ones, which is often a recessionary signal.
• Industrial Output and Sales:A decrease in the production of goods and services.
• Changes in the Unemployment Rate:A significant and sustained increase in unemployment is a key recessionary indicator.

More information is available here.

David Shiller

David Shiller is the Publisher of LightNOW, and President of Lighting Solution Development, a North American consulting firm providing business development services to advanced lighting manufacturers. The ALA awarded David the Pillar of the Industry Award. David has co-chaired ALA’s Engineering Committee since 2010. David established MaxLite’s OEM component sales into a multi-million dollar division. He invented GU24 lamps while leading ENERGY STAR lighting programs for the US EPA. David has been published in leading lighting publications, including LD+A, enLIGHTenment Magazine, LEDs Magazine, and more.

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