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Mark Zandi, Chief Economist at Moody's Analytics, has issued a sharp warning regarding the trajectory of the U.S. economy, declaring that it is currently mired in a “serious affordability crisis.”
In an analysis on X, Zandi attributed stubbornly high consumer prices directly to specific policy choices, stating that higher tariffs and restrictive immigration measures are effectively “juicing” inflation.
According to Zandi, consumer price inflation is currently holding near 3%, well above the Federal Reserve's long-standing 2% target. He argues that this persistence is not an inevitable economic cycle but rather the result of recent interventions.
“It didn't have to be this way,” Zandi wrote, noting that inflation was slowing earlier in the year and was originally on track to return to the Fed’s target.
However, he asserts that a combination of aggressive tariffs, highly restrictive immigration policies, and broader de-globalization trends have “upended that outlook.”
See Also: Top Economist Warns September Jobs Report Is Warning To ‘Cut Back On The Economic Junk Food’
Data released by Moody's Analytics alongside the statement visualizes the cost of these policies.
The forecast compares the current economic baseline against a scenario featuring “no tariffs and typical immigration.”
The divergence is stark: while the scenario without tariffs shows inflation dipping comfortably toward the Fed's target by 2026, the current baseline shows inflation spiking upward again in 2025 and remaining elevated through the following year.
Zandi warns that everything points to “even higher inflation dead-ahead.”
The economist painted a grim picture for the immediate future of the American consumer, particularly for those in lower income brackets.
Mirroring economist Justin Wolfers‘ views, Zandi noted that the burden of these macroeconomic shifts falls disproportionately on low- and middle-income households who are already facing high prices for necessities ranging from groceries to automobiles.
This “affordability crisis” is compounded by what Zandi describes as a job market struggling to create positions and slowing wage growth.
With the economic outlook shifting due to these protectionist measures, Zandi predicts that the “tough financial times” Americans are grappling with will continue for the “foreseeable future.”
The futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading higher on Monday, after a positive close on Friday.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and the Nasdaq 100 index, respectively, closed higher on Friday. The SPY was up 1.00% at $659.03, while the QQQ advanced 0.75% to $590.07, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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