California and New York: Economic Indicators for the U.S.

California, New York, October 17, 2025

News Summary

Economists warn that California and New York’s economic health could determine whether the U.S. can avoid a recession. While recent GDP growth shows some promise, risks from tariffs, inflation, and a weak labor market loom large. As 21 states face recession risks, the job market’s stagnation adds to the concern. These two states, major contributors to national economic growth, must be monitored closely to gauge the overall economic outlook.

California

Economists are sounding alarms over the economic conditions of California and New York, stating that the health of these two states could significantly influence whether the U.S. avoids a recession. As the chief U.S. economist at BMO Capital Markets notes, California and New York serve as potential “canaries in the coal mine,” given their substantial contributions to the national economy.

Recent data has provided some hope that fears of an immediate recession may be easing, particularly after the U.S. recorded stronger-than-expected GDP growth of 3.8% in the second quarter of 2025. However, economists caution that concerns regarding tariffs, inflation, and a weakened labor market continue to pose risks to the overall economic outlook. According to analysis from Moody’s Analytics, 21 states and Washington D.C. are currently experiencing, or are at high risk of experiencing, a recession.

California and New York, while performing relatively well at the moment, are pivotal to the national economy. If either of these states falls into a recession, it could lead to nationwide economic downturns, according to forecasts. The data from the Bureau of Economic Analysis indicates that GDP growth has increased in nearly all states during the second quarter of 2025.

Defining a recession, economists refer to a significant decline in economic activity, which is often marked by declining job growth. Currently, job growth prospects appear grim, as government shutdowns have delayed the release of recent job market data, leading to speculation of another weak period with a potential loss of 4,000 jobs in September.

Mark Zandi, another prominent economist, describes the situation as the job market “sputtering,” with monthly job growth hovering close to zero. Several factors contribute to this downturn in job prospects, including higher tariffs and stringent immigration policies, which create uncertainties for businesses and subsequently limit labor demand. Nonetheless, despite these unsettling indicators, companies have largely refrained from laying off employees, which Zandi views as a crucial buffer against the risk of recession.

The Bureau of Economic Analysis is expected to release its preliminary estimates for third-quarter GDP growth soon, with anticipations of around 1% annual growth. Zandi’s assessment shows that 21 states, which contribute approximately one-third of U.S. economic activity, are already experiencing recessionary conditions or are nearing them. Other states are either seeing growth or maintaining their current economic level; however, regions such as New England are facing challenges due to limited population growth.

Industries such as agriculture, mining, manufacturing, and transportation are struggling, further amplifying the recession risks in various states. Investors and economists alike are watching California and New York closely since these two states collectively account for over 20% of U.S. economic growth.

Although the recent fiscal and monetary policies show potential support for the economy, the likelihood of avoiding a national recession remains slim. Consumer sentiment has significantly dipped in September, signaling widespread worry about inflation and the future of the labor market. Despite some positive economic indicators, experts emphasize caution, acknowledging the myriad risks that could tip the economy toward recession.

FAQs

Deeper Dive: News & Info About This Topic

• Newsweek: U.S. Recession Chances
• Wikipedia: Recession
• MarketWatch: Recession Impact
• Google Search: Economics
• San Francisco Chronicle: California Recession
• Encyclopedia Britannica: Economic Recession
• KTVU: California Job Report
• Google News: California Economy

Author: STAFF HERE HUNTINGTON BEACH

The Huntington Beach Staff Writer represents the experienced team at HEREHuntingtonBeach.com, your go-to source for actionable local news and information in Huntington Beach, Orange 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 Huntington Beach Surf City USA Marathon, the U.S. Open of Surfing, Fourth of July celebrations at the Huntington Beach Pier, and community festivals at Huntington Beach Central Park. Our coverage extends to key organizations like the Huntington Beach Chamber of Commerce and Visit Huntington Beach, plus leading businesses in retail, hospitality, and outdoor recreation that drive the local economy. As part of the broader HERE network, including HEREAnaheim.com, HERECostaMesa.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.