The economy is growing, but that growth is fragile: Moody’s Analytics’ Mark Zandi

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Our next guest says we're entering a new year in a bifurcated economy and that its growth is fragile. Joining us is Mark Sandy, chief economist at Moody's Analytics. I just want to say Mark, hasn't the hasn't the economy surprised you in a in a positive way this year? There were

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so many calls, so many gloom and doom calls, especially around the Trump tariffs and what that would mean for inflation and for the economy. And here we are ending 2025 and it and it's been quite strong.

Mark Zandi (Chief Economist) 00:29.000

Yeah, you know what's weird heard, though. I mean, I went back, because I wrote this piece on the 2026 outlook like most economists do, and I went back and looked at what my expectation was for GDP growth in calendar year 2025 as of December 2024. So, a year ago, what would

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happen in 2025? And the GDP growth number was 2.2%. So, at least back in December of 2025, for 2024, I thought 2025 would be an okay year. But having said that, you know, as we

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came in Did you have said that in April after the tariffs

Mark Zandi (Chief Economist) 01:02.240

were were announced? No, that's exactly where I was going. Yeah, that I certainly would not have. I I would have thought that it would end up being a much weaker year, something closer to a half that kind of growth rate, like a 1% growth rate. And the thing that obviously just

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it's pretty obvious. The thing that was the big positive surprise was the impact of artificial intelligence, both in terms of the investment spending, but most importantly through the run-up in stock prices and the wealth effects that's generated in the effect that's had on

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consumer spending. So you're right, you know as of April, I was much more pessimistic about the year. It ended up being much better than I anticipated.

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So you say it's bifurcated. Is that because in part of this the rising stock market which has helped the wealthier cohort?

Mark Zandi (Chief Economist) 01:42.800

Yeah, in part. I mean, you know, it's uh there's such a dichotomy. When I talk to folks, you know, I get such a uh very perspective on the economy. Some people are incredibly optimistic, things are booming, other folks are incredibly pessimistic, things couldn't be worse. And

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And it And I think that goes just to the fact that the economy itself is what the word is bifurcated. It's just operating on totally different levels. You can see in lots of different ways. Large companies are doing great. Smaller companies, not so much. You can see that in, for

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example, in the ADP data. You can see high-end consumers well to do. Their financial situation is about as good as it's ever been. You know, folks in the that are lower income, middle income, not much. Industries, I mean, the tech tech industry, obviously, healthcare doing

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really well, adding a lot of a lot of jobs. But then manufacturing and the real estate industry, agriculture, transportation industry, they're they're literally contracting, they're in recession. So I can go on and on and on. The economy just feels very bifurcated here, moving

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on again, operating on different dynamics. And that's why I think people are getting such different perspectives on the thing. If you add it all up, the economy is growing, it's okay, it's growing around potential, but it's a as I as you said, it's a fragile growth. I mean, I

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don't know that the economy can operate this way for very long without, you know, something going off the rails at some point.