Twenty-two states are either in a recession or on the precipice of a downturn, according to an intriguing analysis from Mark Zandi, chief economist at Moody's Analytics.

Why it matters: The states in contraction are spread across the country — from Washington to Virginia to Maine — and make up about a third of overall GDP.

• Their problems are driven largely by a mix of slowing immigration, increasing tariffs and federal job cuts, Zandi argues.
• The analysis is based on Zandi's calculation of where things stood in the economy at the end of August — perhaps more useful now, as more data measures go dark with the federal government shut down.

How it works: He created an index looking at state-level jobs data as well as other inputs, including modeled industrial production, personal income and housing starts.

• The idea was to mimic what the eight-member National Bureau of Economic Research Business Cycle Dating Committee does when it determines if the economy is in a recession.
• While employment is the most important indicator, it is only one of many, Zandi tells Axios.

Between the lines: The states that received a negative index ranking landed in the recession bucket; the rest are either still expanding or "treading water."

• For those categories, Zandi says he ultimately made some judgment calls after looking at more inputs, including credit card delinquency rates, credit scores, port activity and migration.

Reality check: Like NBER's recession call, this is a subjective assessment. But in this case, it's just one economist doing the ranking.

• Overall, the economy is not in a recession and the national unemployment rate — at least in August — was still relatively low.

The big picture: The states most impacted are the ones more reliant on agriculture and manufacturing. Those sectors are more likely to be affected by tariff increases, Zandi says.

• The immigration crackdown is suppressing growth as well.
• Also in trouble are the states most exposed to federal job cuts, like Virginia and Maryland. Unemployment in Washington, D.C., was 6% in August, the highest in the country.

Also on the recession list:

• Iowa, where farmers are struggling in the fallout from the trade war. Yet its unemployment rate in August was at 3.8%, lower than the national average of 4.3%.
• Kansas and South Dakota also have more exposure to agriculture.
• Georgia, Illinois and Oregon have comparatively large manufacturing industries.

States doing well are ones still seeing robust population growth, particularly Texas and Florida.

What to watch: New York and California, both in the "treading water" category, could decide which way the national economy goes.

• Keeping them afloat for now is a soaring stock market, which is buoying the wealthy households that are more prevalent in those states.
• California has the second-highest jobless rate in the country at 5.5%, which is basically unchanged since August of last year. In New York, unemployment is 4%, just under the national average.
• "If New York and California turn down, the nation's going into recession," Zandi says.

The bottom line: "My takeaway is not that the economy is in recession, but it's pretty darn close," he says.

Bessent touted President Trump's economic policies at the Fed this morning during a speech and subsequent panel moderated by the central bank's regulatory chief, Michelle Bowman.

Why it matters: That sentence might have shocked Fed watchers in years past, given the central bank's focus on the optics of independence from the executive branch — but it's the new normal, as this is Bessent's second appearance at a Fed conference in three months.

• Bowman is among the officials said to be on the shortlist to be the next Fed chair — an interview process led by Bessent.

What they're saying: "The deficit for this fiscal year ending Sept. 30 will be slightly lower," Bessent told a room of community bankers, a comment met with applause.

• Bessent was referring to estimates from the Congressional Budget Office released yesterday that showed the deficit shrank as a share of GDP in the 2025 fiscal year, to 6% from 6.4% in 2024.

The intrigue: Bessent spoke at a conference that focused on community banking, a topic Bowman said she had "never heard a Treasury secretary talk about the importance of ... in the United States and for the U.S. economy.

• "The banks that serve Main Street must have the same chance to succeed as the banks that serve Wall Street — but the post-crisis regulatory framework has instead become a threat to the community bank model," Bessent said in his prepared remarks.

Bessent's comments during the subsequent Q&A focused on Trump's deregulatory agenda and cryptocurrency-related innovations that the White House has embraced.

• "With this administration's effort to bring manufacturing back to the U.S. ... when you see a multinational company set up, they are going to need a big ecosystem," Bessent said.
• "JPMorgan is not interested in the ecosystem. I think everybody in this room should be," he added.

Of note: Fed governor Lisa Cook, whom Trump is attempting to fire pending a Supreme Court decision, was among the officials in the room for Bessent's discussion.