U.S. Economy Is Becoming ‘Fragile’ As Weak Consumer Spending, Geopolitical Risks Raise Recession Fears

Economist Mark Zandi on Sunday warned that the U.S. economy is showing signs of growing fragility, as weakening consumer spending and rising geopolitical tensions increase pressure on the outlook.

Weak Consumer Spending And Rising Economic Strain

Zandi, in a post on X, said last week’s data highlights “just how fragile the economy is,” warning that conditions were deteriorating even before the broader impact of the Iran conflict is fully felt.

He noted that real consumer spending growth has been running at “barely 1% annualized” in recent months, while the personal saving rate has fallen to around 4%, a historically low level.

Zandi also pointed to stalled job growth, weakening consumer sentiment, high inflation eroding real incomes, and higher interest rates as key pressures weighing on households.

“With job growth stalled, sentiment slumping, high and accelerating inflation cutting into real incomes, the stock market going sideways, and higher interest rates, it isn’t hard to see consumers pulling back,” he wrote.

He added that recent support from larger tax refunds is temporary and is expected to fade after April 15.

Zandi also warned that “the economic headwinds from the war are just beginning to blow,” increasing downside risks.

“My angst around the possibility of a recession continues to rise,” he said.

US Inflation Pressures Rise On Tariffs, War And Policy Moves

Former Transportation Secretary Pete Buttigieg accused President Donald Trump of worsening inflation, saying prices had risen due to tariffs, energy policy choices and the Iran conflict.

He argued inflation had surged sharply and criticized the administration for failing to contain rising costs.

Gerber Kawasaki CEO Ross Gerber also warned that inflation had likely bottomed out and was rising again, driven by “wildly inflationary” forces such as tariffs and war.

He said persistent inflation was weighing on both stocks and bonds and making markets more difficult to navigate.

A Federal Reserve study found that 2025 tariffs fully passed through to consumers, raising core goods inflation and accounting for most of the recent price increases in that category.

Economists said the impact was effectively complete, with costs passed through “dollar-for-dollar” to households.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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