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Consumer spending, the backbone of the American economy, is flashing warning signs reminiscent of the run-up to the 2008 financial crisis. According to Mark Zandi, chief economist at Moody’s Analytics, the latest data shows inflation-adjusted household spending has stalled in 2025, raising concerns about the broader economy, he said in an X post on August 31. To this end, Moody’s Analytics data indicates that real consumer spending in 2025 has grown only slightly through July, marking the weakest performance since the 2008–2009 recession. Unlike past recoveries, where spending steadily climbed in the first half of the year, 2025 stands out for its stagnation.  By midyear, growth hovered near zero, below the 1% to 2% range typical of stable economic expansions. The weakness points to a sharp slowdown in consumer momentum despite relatively resilient job and wage growth. Economy in the danger zone While Zandi noted the trend does not yet confirm a recession, the parallels with 2008 suggest the economy is treading dangerously close to one. With consumer spending accounting for roughly two-thirds of U.S. GDP, any prolonged weakness in household outlays risks pushing the economy over the edge. “Spending this year through July has barely budged from last year’s end – worse than any year since 2008-09. We all know what was going on then. This year’s sideways consumer spending isn’t consistent with a recession, but it is with an economy on the brink of one,” Zandi noted.  This warning aligns with Zandi’s broader concerns. As reported by Finbold, the economist has noted that nearly a third of the U.S. economy is either in recession or at high risk, with his models placing the probability of a downturn within a year at close to 50%. At the same time, Zandi has flagged weak job data, slowing payroll growth, and…

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Filed under: News - @ August 31, 2025 7:34 pm