Moody's Chief Economist Warns U.S. Recession Is Inevitable If Hormuz Strait Blockade Continues

According to CoinDesk, Mark Zandi, chief economist at Moody’s—one of the three major U.S. credit rating agencies—warned that the U.S. economic outlook will continue to deteriorate as long as the Strait of Hormuz remains effectively closed to oil tankers; if the situation does not improve within weeks, a U.S. recession will be unavoidable. Zandi noted that prior to the outbreak of conflict with Iran, Moody’s machine learning-based leading indicators had already shown a 49% probability of a U.S. recession over the next 12 months, with the next published data expected to reach or exceed 50%. He emphasized that every U.S. recession since World War II—except for the pandemic period—was preceded by a sharp spike in oil prices. The current situation differs from 2022, when the U.S. economy was in a post-pandemic stimulus-driven growth phase, providing a buffer for the Fed’s rapid rate hikes; today, the U.S. economy lacks such support, with weak employment data and a Q4 2025 GDP growth rate of just 0.7%. Several investment banks still maintain recession probabilities in the 30% to 40% range, while the Yardeni Research team recently raised the probability of a market crash from 20% to 35%. The S&P 500 rose 1% on Monday, closing at 6,699.38, indicating that Wall Street has not yet priced in a recession.