US Economy Shows Growth Amid Rising Regional Recessions

The United States economy is sending mixed signals, with official data indicating a growth rate of 3.9% for the third quarter of 2025. This figure, derived from the Atlanta Fed’s GDPNow model, stands in stark contrast to the troubling economic realities faced by many Americans. Nearly 82% of the population resides in regions officially categorized as being in recession, a figure that has doubled since January 2025, according to data from Rosenberg Research utilizing the Federal Reserve’s Beige Book.

This discrepancy highlights a significant divide between the national growth figures and the local economic challenges that many communities are experiencing. Consumer demand is fragmented, corporate profits are declining, and the UBS recession probability model now estimates a greater than 90% chance of a U.S. recession, despite the seemingly robust national growth rate.

Regional Disparities and Job Losses

The economic landscape is not uniform across the country. While service-oriented coastal areas maintain relative stability, many manufacturing and trade-dependent regions are struggling. Over 172,000 jobs have been lost in 2025, primarily due to automation, tariff disruptions, and corporate restructuring. Notably, Amazon is set to eliminate 30,000 corporate positions, representing 10% of its white-collar workforce. Additionally, the tech sector has seen significant cuts, with over 128,000 positions eliminated across major companies, including Meta and Microsoft.

Retail and logistics sectors are particularly hard-hit, losing over 64,000 jobs as tariffs squeeze imports and disrupt supply chains. Even federal agencies, such as the National Park Service and the U.S. Geological Survey, have been forced to downsize. This wave of layoffs, coupled with rising inflation driven by imported goods, is fueling fears of stagflation—a scenario characterized by stagnant economic growth, high unemployment, and persistent inflation.

Mark Zandi, Chief Economist at Moody’s Analytics, noted that approximately one-third of the U.S. economy is already contracting, while another third shows little to no growth. Consumer confidence is waning, and real wages have stagnated, contributing to a growing sense of economic unease.

Economic Indicators and Future Outlook

Despite the low jobless claims, new payroll additions are experiencing a sharp decline. The inverted yield curve, currently at 23%, serves as a traditional indicator of recession, while the Conference Board’s Leading Economic Index turned negative in August, historically a precursor to economic downturns. In light of these factors, the International Monetary Fund (IMF) has assessed the probability of a U.S. recession at approximately 40%, with Goldman Sachs estimating a 30% chance within the next year.

The current economic environment reflects a “patchwork economy,” where certain regions and sectors thrive while others falter. The effects of tariff policies implemented in early 2025 have disrupted trade and manufacturing, exacerbating regional economic disparities. The UBS recession model’s prediction of over 90% probability of recession underscores the stagnation in employment, industrial production, and credit markets.

Looking ahead, economists warn that automation and AI-driven job losses may further complicate recovery efforts. Klarna CEO Sebastian Siemiatkowski has cautioned that a “temporary AI recession” could precede any long-term productivity rebound. If consumer spending continues to decline, the economy’s remaining support pillars may erode.

As the U.S. navigates this challenging economic landscape, the Federal Reserve faces a daunting dilemma: whether to cut interest rates to stimulate growth or maintain current rates to control inflation. The illusion of 3.9% growth masks an uncomfortable truth; while national statistics may paint a picture of resilience, the lived experiences of many Americans reveal a different reality—one of decline and uncertainty.

In summary, the U.S. economy is not officially in recession yet, but signs of a fragile recovery are evident. The next 12–18 months will be critical in determining whether the current slowdown leads to a formal recession or if the economy can stabilize amidst these persistent challenges.