Recent labor market data suggests that the U.S. may already be entering the recession that some economists have for months been anticipating, according to the global financial services firm and credit ratings agency Moody’s.
The company devised a new model to determine whether and when the country is in the midst of a downturn. Incorporating unemployment and labor market participation rates, Moody’s Chief Economist Mark Zandi said this week that the “Vicious Cycle Index,” or VCI, has now flashed red through the first three months of 2026.
“Recession risks thus remain uncomfortably high, with close to even odds of a downturn in the coming year,” Zandi wrote on X, citing the company’s existing machine-learning model as well as the latest VCI calculations.
Why It Matters
A number of economists have warned that fallout from the Iran war—primarily the ongoing increase in global oil prices—could upset an already-fragile economic picture in the U.S. and push the country closer to a recession. Some financial institutions have increased their odds of a downturn occurring in the near future, following the February 28 strikes by the U.S. and Israel that triggered the conflict, while other experts have said that months of meager employment growth means that the country may already be caught in a “jobs recession.”
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