- Leading U.S. economist Mark Zandi talked about the economy during a visit to Salt Lake City.
- Zandi outlined national issues and Utah's resilience in meetings with officials and community leaders.
- Troublesome federal policy changes, overheated markets are challenging U.S. economic dominance.
Leading U.S. economist Mark Zandi shared one of his biggest current concerns with a group of Utah reporters Thursday.
“The national economy is struggling,” Zandi said. “It’s not in recession. It’s growing, but the rate of growth is slow. It’s below the economy’s potential, and you can see the struggles, most evidently in the job market.”
Zandi said the U.S. job market is in a state of stagnation with hiring at a virtual standstill across most sectors as business owners struggle to navigate uncertainty wrought by shifting national economic policy, particularly regarding trade and immigration.
The impacts of a weak employment sector are, at the moment, being blunted by rising investment in, and economic activity surrounding, the fast-expanding realm of artificial intelligence development, he said.
“What’s driving all of this is this kind of pitched battle between the headwinds created by the tariffs and immigration policy and the tailwinds that are being created by artificial intelligence.” Zandi said. “These two things are moving at cross purposes here, and so far, they’re battling to a draw.”
The U.S. economy is “hanging in there” but whether or not the AI sector, along with still robust consumer spending, is enough to sustain growth will become clearer in the next six to twelve months, he said. But the journey there will be “uncomfortable.”
Zandi was in Salt Lake City as part of the University of Utah’s “Societal Impact Seminar” and where he also met with state and local officials and community leaders.
He is the author of multiple books on national economic issues, co-founder of Economy.com and chief economist of Moody’s Analytics. Zandi frequently testifies before Congress and conducts regular briefings on the economy for corporate boards, trade associations and policymakers at all levels.
The Kem C. Gardner Policy Institute hosted a media briefing Thursday where Zandi and Gardner’s chief economist Phil Dean fielded questions and discussed Utah’s current economic landscape and where it fits within a turbulent national economy.
Zandi offered his read on the state of the U.S economy, noting a bleak national employment sector was just one bellwether of deeper issues but also lauded Utah for its continued fiscal wherewithal and unique attributes.
What’s behind Utah’s better-than-most performance?
Dean noted that Utah’s economy continues to outperform most of the nation but is not immune from the impacts of national slowing. And while the local job market is still solid, the state is facing its own economic hurdles.
“We have some very significant challenges that we’re dealing with ... but housing in particular,” Dean said. “We’ve gone from being around the national average in terms of housing costs to being much more expensive than the nation but (Utah) incomes have not paced with that.”
Zandi said Utah’s fiscal vitality is thanks in large part to the state’s diverse economic portfolio. He also noted other factors bolstering Utah’s unique resilience to outside factors.
“The one thing as a visitor to Utah that strikes me is how cohesive the politics are as well as a social fabric very different from where I come from,” he said. “I live in Philadelphia. Pennsylvania has a much more fractured political process, and that makes it much more difficult to address ... very pressing issues. But Utah is in an enviable position with regard to that kind of social cohesion. I think it’s very important.”
Immigration, tariffs and uncertainty
Zandi said federal changes to immigration and trade policy are adding to the nation’s economic woes.
“I’m concerned about both,” he said. “I’m not a fan of broad-based tariffs, you know, I think both in the near and longer term. I’m not a fan of the highly restrictive immigration policy. I do think we need to secure the borders. That’s a national security issue, but I think we need immigrants of all skills. We should be working towards a rational immigration policy.”
Zandi also noted that on-again, off-again declarations, especially in regards to international trade policy, were contributing to upheaval and uncertainty for U.S. business operators.
“I worry about the implementation,” he said. “If policy continues to be up and down and all around, it’s very difficult to plan. And businesses will continue to sit on their hands, and we’re not going to be able to realize our potential in terms of investment.”
Zandi underscored that legal immigration, including the H-1B visa program, have helped drive U.S. innovation and made significant contributions to broad-based national and local economic prosperity.
“We want to continue to attract the best and the brightest to the U.S. because the best and the brightest don’t necessarily have to be in the United States,” Zandi said. “In fact, in many cases, they’re not. So we need the best and the brightest to come here and flourish here, start companies and innovate here.”
Is AI driving a market bubble?
Zandi also pointed to U.S. investment markets which, he believes, are overvalued and could be poised for a correction — an event that could further roil the U.S. economy.
“It’s not just the equity markets,” he said. “It’s financial markets more broadly. You can feel it in the corporate bond market, corporate credit spreads are very thin. You can feel it in the price of gold and silver. Feel it in the crypto prices. So markets, financial markets feel juiced to me.”
In a September posting to X, Zandi pointed to some market metrics that help illustrate his concerns about an over-extended U.S. investment realm.
“While there are good reasons for stock prices to be up a lot — yes, AI — but investors appear to be getting ahead of themselves," Zandi wrote. “My favorite measure of stock market valuation is the ratio of the market value of all publicly traded stocks, as measured by the Wilshire 5000, and after-tax corporate earnings. In the past 75 years, this economy-wide price-earnings multiple was only higher in the Y2K bubble. Of course, today’s AI-related companies are not the internet-related companies back then, but … And if the current stock market were to correct, and the well-to-do saw more red on their stock tickers than green, well…"