California and New York, October 17, 2025
News Summary
California and New York’s economies are under scrutiny as economists warn their stability might determine the U.S. recession outlook. While GDP grew by 3.8%, concerns over tariffs, inflation, and a weak labor market persist. A report indicates 21 states are at risk of recession, highlighting the critical role these two states play in the overall economic landscape. Job growth remains stagnant, raising fears of economic downturn, despite companies holding back on layoffs.
California and New York‘s economic health has become a focal point for economists who warn that the stability of these states could determine whether the United States avoids a recession. As of now, both states are described as “holding their own,” yet they carry significant weight in influencing the trajectory of the national economy. If either state were to slip into a recession, it could trigger a nationwide economic downturn.
Despite fears of an impending recession, recently released data shows that the U.S. Gross Domestic Product (GDP) grew by 3.8% in the second quarter of 2025, easing immediate concerns. Nevertheless, issues such as tariffs, inflation, and a weakened labor market continue to cloud the economic outlook. Notably, a report from Moody’s Analytics indicates that 21 states and Washington D.C. are either in a recession or at high risk of entering one.
According to economic analysis, California and New York collectively account for over 20% of U.S. economic growth, underscoring their crucial role in national stability. Economists have highlighted the potential for these states to act as “canaries in the coal mine” for the larger economy, suggesting that their performance can signal broader economic trends.
While GDP growth has improved in nearly every state as per the Bureau of Economic Analysis (BEA), concerns remain about the labor market. Job growth data has been delayed amid a government shutdown, raising fears of another weak job period in September, with predictions of a potential loss of 4,000 jobs. Analysis indicates that job creation is nearly stagnant, contributing to a perception of a “sputtering” job market.
The labor market is further complicated by external factors such as higher tariffs and restrictive immigration policies. These factors create uncertainties for businesses, leading to reduced demand for labor. Despite these challenging indicators, companies have refrained from massive layoffs, a situation that many economists see as a buffer against recession.
The BEA is expected to release initial estimates for third-quarter GDP growth, which are anticipated to reflect annual growth of around 1%. Mark Zandi’s analysis suggests that job growth is critical and tied to overall economic stability. As of now, 21 states generate about one-third of U.S. economic activity and are either in recession or near it.
In contrast, other states show signs of maintaining growth or merely staying stable. New England states are facing particular struggles tied to slow population growth. Certain key industries, such as agriculture, mining, manufacturing, and transportation, are experiencing hardship, further contributing to the recession risks facing the U.S.
Moreover, although consumer sentiment saw a drop in September, reflecting increasing anxiety about inflation and labor market conditions, the overall assessment of the current economic landscape remains cautious. Despite some positive signs in the economy, experts are wary of underlying risks that could push the economy toward a recession.
FAQ
- What is the significance of California and New York’s economies?
- California and New York’s economies could determine whether the U.S. avoids a recession. If either state enters a recession, it may lead the entire nation into one.
- What are the recent GDP growth figures?
- The U.S. GDP grew by 3.8% in the second quarter of 2025.
- How many states are at risk of recession according to Moody’s Analytics?
- According to Moody’s Analytics, 21 states and Washington D.C. are in, or at high risk of, a recession.
- What current issues are affecting the national economy?
- Concerns remain about tariffs, inflation, and a weakened labor market impacting the economy’s outlook.
- What upcoming economic data can be expected from the BEA?
- The BEA is set to release its first estimates for GDP growth in the third quarter, with projections indicating annual growth of about 1%.
Deeper Dive: News & Info About This Topic
- Newsweek: U.S. Recession Chances in California and New York
- Wikipedia: Economy of the United States
- San Francisco Chronicle: California Recession Worries
- Google Search: Recession
- Fortune: America Feels Recession
- Encyclopedia Britannica: Recession
- KTVU: California Job Report and Recession Possibility
- Google News: California New York Recession
Author: STAFF HERE BEVERLY HILLS WRITER
The Beverly Hills Staff Writer represents the experienced team at HEREBeverlyHills.com, your go-to source for actionable local news and information in Beverly Hills, Los Angeles County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Rodeo Drive Concours d'Elegance, the Beverly Hills artSHOW, Concerts on Canon, and holiday celebrations throughout the city. Our coverage extends to key organizations like the Beverly Hills Chamber of Commerce and Visit Beverly Hills, plus leading businesses in luxury fashion, hospitality, and entertainment that drive the local economy. As part of the broader HERE network, including HERELosAngeles.com, HERESantaAna.com, HEREHuntingtonBeach.com, and HERECostaMesa.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
