Moody’s Analytics Chief Economist Mark Zandi warned Thursday that the U.S. economy was struggling and said disruptions linked to the US- Israel war on Iran could significantly increase recession risks.

“The economy isn't just soft, it's struggling……….The Iran war needs to end, and the Strait of Hormuz needs to be reopened soon, or recession will become more likely than not,” Zandi said in a post on X.

The economy isn't just soft, it's struggling. That's the clear message in the flood of economic data released today.

Ordered from least to most worrisome:

First-quarter real GDP was revised down to just 1.6% and this includes the bounce back from the government shutdown at the…

— Mark Zandi (@Markzandi) May 28, 2026

Zandi Points To Weaker Growth, Housing And Capital Spending As Warning Signs

Supporting Zandi’s warning on persistent price pressures, American consumers paid more for goods and services in April than they had in nearly three years. Inflation rose 3.8% year-over-year—its highest level since 2023 and nearly double the Federal Reserve’s 2% target.

The economist also highlighted signs of slowing economic growth, noting that first-quarter U.S. GDP was revised lower to an annualized 1.6% from the previously reported 2.0%, while weaker housing and business investment data pointed to broader softness across the economy.

Zandi further warned that household finances are coming under pressure, citing declines in real disposable income and the personal saving rate. He argued that consumers are running out of the financial resources needed to sustain spending, which stalled last month.

Iran Conflict Could Be The Tipping Point For The U.S. Economy

Zandi’s warning comes as the US-Israel war on Iran continues to disrupt traffic through the Strait of Hormuz—a strategic waterway that carries roughly a quarter of the world’s seaborne oil trade—slowing energy shipments, raising shipping costs and fueling concerns about higher oil prices.

For investors, the concern is that higher oil prices could reignite inflation just as economic growth slows. That combination could further pressure consumers and increase the likelihood of a recession, a risk Zandi said is becoming harder to ignore.

Fed Faces A Difficult Balancing Act

The Federal Reserve faces a challenging backdrop of slowing economic growth and persistent inflation. While weaker economic data could strengthen the case for lower interest rates, inflation remains well above the central bank’s 2% target.

Minneapolis Fed President Neel Kashkari, on Thursday, told CNBC that inflation remains the Fed’s primary concern, warning that persistently high price pressures could unanchor consumer expectations and force policymakers to take a more aggressive approach.

Image via Imagn