Moody's Analytics chief economist Mark Zandi stated that the economic fate of New York and California could determine whether the entire U.S. enters a full-blown recession. In his latest analysis, Zandi noted that while some states have already entered localized recessions, the country's two largest state economies are currently “treading water.” The primary concern is the heavy reliance of both states on globalization and free trade, which face headwinds from rising tariffs and tighter immigration policies. Zandi highlighted that California's tech sector is particularly vulnerable to layoffs, though other sectors like healthcare and education are providing some stability. According to the analysis, these two states represent the final line between a stalled national economy and a downturn.