From Trump tariffs to DOGE: Moody’s economist on why US might be heading towards recession

Zandi outlined how a mix of poor policy decisions is pushing the United States close to a recession-like situation.

The US economy may be heading for troubled waters, thanks to two unexpected culprits: US President Donald Trump-imposed tariffs and the rise of speculative assets like Dogecoin, according to Mark Zandi, Chief Economist at Moody's Analytics.

Moody's Mark Zandi cautioned that the tariff's full impact on consumer prices is just starting to take effect. (X)

In an interview with Business Insider, Zandi outlined how a mix of poor policy decisions is pushing the United States close to a recession-like situation.

"The reason why the economy is on the precipice of recession is policy," Zandi said. "If we go into recession, just how deep and long the recession will be will be because of policy."

Tariffs, tight immigration, and Fed moves: Some major missteps

Pointing to the source of economic strain on the US economy, Zandi said President Donald Trump's tariff regime, restrictive immigration policies, and recent Federal Reserve actions are major economic missteps.

He feels that these factors led to a situation of uncertainty, which has caused delays in hiring and investment for businesses.

"I think the slowdown in growth and the acceleration of inflation are due entirely to economic policy," he told Business Insider.

He also aimed for federal budget cuts, particularly those targeting the Department of Government Efficiency, which he believes has further weighed down the economy.

Tariffs and DOGE impact

While the tariffs have been in place for some time, Zandi cautioned that their full impact on consumer prices is just starting to take effect.

"They're slowly but still being passed through, and that'll become vividly clear in the next few months," he said.

Zandi also drew attention to the role of speculative assets, singling out meme coins like Dogecoin (DOGE). He sees the frenzy around such assets as a symptom of broader market instability.

Recession risks: Is anyone safe?

Zandi warned that no asset class will be immune to a recession if it actually hits. While traditional safe havens like US Treasurys and the dollar have long provided stability, they could come under pressure if tariffs and policy missteps persist.

"Rising tariffs could even erode the safe-haven status of US Treasurys and the dollar," he noted, signalling a shift in global investor confidence.

He also cautioned that the rate cuts, if announced, may offer some relief. They'll help cushion the economy's weakening, but they won't stop it.