According to Mark Zandi, Chief Economist at Moody’s Analytics, the answer depends heavily on the top 10% of earners. Recent data shows that these high-income households are fueling the economy more than ever, accounting for 49.2% of all U.S. spending in Q2 2025—the highest share since 1989.
“The U.S. economy is being largely powered by the well-to-do,” Zandi explained in a post on X. “As long as they keep spending, the economy should avoid recession. But if they turn more cautious, for whatever reason, the economy has a big problem.”
Recession Risk: Nearly a Coin Toss
Zandi cautioned that there is now an “uncomfortably high” 48% chance of a U.S. recession in the next 12 months, based on Moody’s latest leading indicators. While still below 50%, it’s the closest the country has come to recession territory without actually tipping into one.
That warning comes as the Federal Reserve cut interest rates by 25 basis points to a range of 4.0%–4.25%, citing employment risks and persistent inflation pressures.
A Split Economy: The Top 20% vs. Everyone Else
The widening gap between income groups underscores why so many Americans feel the economy isn’t working for them.
- Bottom 80% of households (earning less than ~$175,000/year): Spending has only kept pace with inflation since the pandemic, leaving many feeling squeezed.
- Top 20% of households: Spending power has grown significantly, helping to sustain growth.
- Top 3.3% of households: Enjoying outsized gains, far beyond inflation.
In other words, the wealthiest Americans are carrying the weight of consumer demand—and if they cut back, recession risks rise dramatically.
What This Means for U.S. Homebuyers and Investors
For families, buyers, and real estate investors, the current climate is a double-edged sword. On one hand, lower Fed rates could eventually ease borrowing costs. On the other, recession fears could fuel more caution in lending, investing, and spending decisions.
At Lendworth USA, we keep a close watch on these economic signals to help our clients make smart, long-term financing and real estate investment choices—whether the economy stays resilient or faces a downturn.
✅ Key takeaway: The U.S. economy is balancing on a knife’s edge. As long as the wealthiest households keep spending, a recession may be avoided—but if they slow down, the ripple effects could be felt everywhere.