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"At a time when costs are rising and tariffs are wreaking havoc on people's pocketbooks, Republicans are doubling down on their agenda of raising healthcare costs on millions of Americans."
US states accounting for roughly a third of the nation's gross domestic product are currently in recession or on the verge of one as the federal government shutdown enters its fourth week, with congressional Republicans and President Donald Trump refusing to support an extension of key healthcare subsidies that are set to lapse at the end of the year.
A recent analysis by Moody's Analytics chief economist Mark Zandi estimates that 22 states are experiencing an economic downturn or are at serious risk of recession, a nascent crisis fueled by Trump's tariffs, mass deportations, and sweeping attack on the federal workforce—an assault that has intensified since the federal government shut down at the beginning of October.
States currently in or on the brink of recession include Maine, Oregon, Washington, Illinois, and Georgia. Among the states “treading water” are California and New York, according to Zandi, whose analysis was based on figures that predated the government shutdown.
Leor Tal, campaign director at the progressive advocacy coalition Unrig Our Economy, said Monday in response to the analysis that "Republicans in Congress are holding the US economy hostage, and working families are paying the price."
"At a time when costs are rising and tariffs are wreaking havoc on people's pocketbooks, Republicans are doubling down on their agenda of raising healthcare costs on millions of Americans," said Tal. "It's time for congressional Republicans to reopen the government, extend the healthcare tax credits, and start lowering costs for working families."
The shutdown, which Trump has embraced and exploited to advance his far-right agenda, began at a time when the country's economy was already on uneasy footing, with food prices continuing to rise despite the president's campaign promises, GOP Medicaid cuts causing chaos across the nation, and the labor market flashing signs of distress.
With no end to the shutdown in sight, The Associated Press noted Sunday that the "the U.S. Travel Association said the travel economy is expected to lose $1 billion a week as travelers change plans to visit national parks, historic sites, and the nation's capital, where many facilities such as Smithsonian Institution museums and the National Zoo are now closed to visitors."
If the government remains shut down in November, tens of millions of Americans could see cuts to Supplemental Nutrition Assistance Program (SNAP) benefits—which boost the economy while reducing hunger—and other aid.
Meanwhile, even as the Trump administration withholds federal labor market data amid the shutdown, economists say private and state-level figures signal escalating pain for workers that is sure to intensify the longer the closure persists.
"The fingerprints of Trump policy decisions are most clearly found in the distinct rise in federal [unemployment insurance] claims—claims filed specifically by workers laid off from federal agencies," Elise Gould and Joe Fast of the Economic Policy Institute wrote last week. "However, we are also seeing troubling trends in UI claims in regular state programs, particularly in the Washington, DC metropolitan area."
"The shutdown (and potentially the attempted politicization of key government data-collection agencies) could leave policymakers flying blind just as the economy encounters real turbulence," they cautioned.
John Diamond, director of the Center for Public Finance at Rice University's Baker Institute, warned earlier this month that the shutdown "could be a tipping point to recession."
"If it is resolved quickly, the costs will be small," Diamond argued, "but if it drags on, it could send the US economy into a tailspin."
"I wouldn't touch this stuff now," warned one financial analyst about the AI industry.
Several analysts are sounding alarms about the artificial intelligence industry being a major financial bubble that could potentially tip the global economy into a severe recession.
MarketWatch reported on Friday that the MacroStrategy Partnership, an independent research firm, has published a new note claiming that the bubble generated by AI is now 17 times larger than the dot-com bubble in the late 1990s, and four times bigger than the global real-estate bubble that crashed the economy in 2008.
The note was written by a team of analysts, including Julien Garran, who previously led the commodities strategy team at multinational investment bank UBS.
Garran contends that companies have vastly overhyped the capabilities of AI large language models (LLMs), and he pointed to data showing that the adoption rate of LLMs among large businesses has already started to decline. He also thinks that flagship LLM ChatGPT may have "hit a wall" with its latest release, which he said hasn't delivered noticeably better performance than previous releases, despite costing 10 times as much.
The consequences for the economy, he warns, could be dire.
"The danger is not only that this pushes us into a zone 4 deflationary bust on our investment clock, but that it also makes it hard for the Fed and the Trump administration to stimulate the economy out of it," he writes in the investment note.
Garran isn't the only analyst expressing extreme anxiety about the potential for an AI bubble to bring down the economy.
In a Friday interview with Axios, Dario Perkins, managing director of global macro at TS Lombard, said that tech companies are increasingly taking on massive debts in their race to build out AI data centers in a way that is reminiscent of the debts held by companies during the dot-com and subprime mortgage bubbles.
Perkins told Axios that he's particularly wary because the big tech companies are claiming "they don't care whether the investment has any return, because they're in a race."
"Surely that in itself is a red flag," he added.
CNBC reported on Friday that Goldman Sachs SEO David Solomon told an audience at the Italian Tech Week conference that he expected a "drawdown" in the stock market over the next year or two given that so much money has been pumped into AI ventures in such a short time.
"I think that there will be a lot of capital that’s deployed that will turn out to not deliver returns, and when that happens, people won’t feel good," he said.
Solomon wouldn't go so far as to definitively declare AI to be a bubble, but he did say some investors are "out on the risk curve because they’re excited," which is a telltale sign of a financial bubble.
According to CNBC, Amazon CEO Jeff Bezos, who was also attending Italian Tech Week, said on Friday that there was a bubble in the AI industry, although he insisted that the technology would be a major benefit for humanity.
"Investors have a hard time in the middle of this excitement, distinguishing between the good ideas and the bad ideas," Bezos said of the AI industry. "And that’s also probably happening today."
Perkins made no predictions about when the AI bubble will pop, but he argued that it's definitely much closer to the end of the cycle than the beginning.
"I wouldn't touch this stuff now," he told Axios. "We're much closer to 2000 than 1995."
"The addition of the derivative steel and aluminum tariffs in the middle of the month... was devastating," said one manufacturing executive.
Two reports released Wednesday paint an increasingly dark picture of the American economy under US President Donald Trump, matching predictions that his tax policy and chaotic tariffs would ultimately harm workers and put a drag on the nation's financial outlook.
First, processing firm ADP estimated in its latest monthly report that the US economy lost 32,000 jobs in September, with contractions in employment happening across multiple industries.
The leisure and hospitality industry was hardest hit, as ADP estimated it lost 19,000 jobs last month, followed by professional and business services, which lost an estimated 13,000 jobs, and financial activities, which lost an estimated 9,000 jobs.
Small businesses took the biggest hit, as they shed 40,000 employees on the month, ADP estimated.
Nela Richardson, chief economist at ADP, said these latest numbers validate "what we've been seeing in the labor market, that US employers have been cautious with hiring."
The ADP report is not seen as reliable as the monthly jobs report issued by the Bureau of Labor Statistics, although that report will not be released on Friday as previously scheduled due to the current shutdown of the federal government.
In addition to the ADP survey, the latest ISM Manufacturing PMI Report revealed that the "manufacturing sector contracted in September for the seventh consecutive month" amid uncertainty caused in large part by Trump's tariffs.
Comments made by executives in the new ISM survey point to a dire situation facing many US manufacturers.
"Business continues to be severely depressed," said one respondent. "Profits are down and extreme taxes (tariffs) are being shouldered by all companies in our space. We have increased price pressures both to our inputs and customer outputs as companies are starting to pass on tariffs via surcharges, raising prices up to 20 percent."
This executive, who works for a transportation equipment firm, added that "the addition of the derivative steel and aluminum tariffs in the middle of the month—with no announcement—was devastating."
An executive at an electrical equipment supplier, meanwhile, said that "customer orders are depressed for heavy machinery because tariffs are so impactful to high-end capital equipment." The executive said their company's revenue projections were flat for the rest of the year, with "no outlook to improve in 2026."
Another manufacturing executive simply said, "Steel tariffs are killing us."
This gloomy sentiment isn't just shared by business executives, but also US consumers. The Conference Board on Tuesday released its Consumer Confidence Index showing a "sharp deterioration in consumers’ views of the current economic situation" in the US.
Stephanie Guichard, senior economist at The Conference Board, noted that consumer confidence numbers are now the lowest they've been since April 2025, when Trump sent shockwaves through the economy by announcing his so-called "Liberation Day" tariffs that he partially backed away from in the face of a cratering stock market.
"Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low," Guichard explained. "This is consistent with the decline in job openings."
The Conference Board also found that consumers' short-term outlook for income, business, and labor market conditions was once again below the threshold that "typically signals a recession ahead."