Masters in Business: Mark Zandi (Chief Economist, Moody’s Analytics) on the US Economy

Host: Barry Ritholtz (Bloomberg)
Guest: Mark Zandi (Chief Economist, Moody’s Analytics)
Date: August 29, 2025

Episode Overview

Barry Ritholtz sits down with Mark Zandi, longtime chief economist at Moody’s Analytics, to explore Zandi’s extraordinary career—spanning entrepreneurship, dot-com growth, and 20 years at Moody’s—plus insights on the US economy, policy responses past and present, the housing market, labor, climate impacts, tariffs, and Fed policy. Zandi offers a rare, deeply data-driven, and nonpartisan lens on contemporary economic risks and future uncertainties.

Mark Zandi's Background & Moody’s Journey

Early Academic and Professional Foundation

• No predetermined plan:

  “I had no career plan.” — Mark Zandi [02:45]

• Family affiliation with Penn and Wharton shaped his path.
• Mentored by Nobel laureate Lawrence Klein; early experience at Wharton Econometrics, learned practical macro modeling in the 1980s era of mainframes and punch cards.

Building Regional Financial Associates & Economy.com

• Founded his firm post-grad with his brother and best friend, pivoting early to PC-based analysis.
• Surfed the late 90s Internet boom:

  “We were an economic forecasting firm masquerading as a dot com.” — Zandi [08:53]

• Purchased economy.com for $250k during the domain gold rush; outlasted the dot-com bust due to real clients and revenue.

Acquisition by Moody’s

• Connection with fellow Wharton alumnus led to Moody’s Analytics buying economy.com.
• Story of acquisition:

  “He asked, Mark, what price would it take for us to end this negotiation? …I gave him a price and he took it right away. And I go, too little, too low.” — Zandi [10:16]

• The Moody’s name catapulted global credibility, especially for government and sovereign clients.

Key Economic Insights & Historical Perspectives

Anticipating the Housing Crisis

• Zandi’s expertise in housing finance led him to pen prescient warnings in 2005:

  “Where are the regulators? The runaway housing market needs tougher regulatory oversight.” — Zandi paraphrased [12:12]

• Noted the danger of loose lending standards and unregulated nonbank lenders.
• Briefed the Fed pre-crisis:

  “I give this talk and... I didn’t get a single question from one Fed member.” [14:16]

Economic Policy Advising (Obama & McCain)

• Played a nonpartisan advisory role:

  “I have always provided advice when asked from both sides of the aisle... I’ve always been nonpartisan.” — Zandi [21:56]

• Developed early “multiplier” estimates for stimulus policy, influencing Obama and later Biden’s approaches.
• Commented on the contrast between monetary stimulus in the 2010s and fiscal stimulus in the 2020s:

  “It feels very much like the 2010s was the era of monetary stimulus, and the 2020s seems to be the era of fiscal stimulus.” — Ritholtz [18:01]

Policy, Deficits, and Partisanship

• Observed:

  “Everybody is a deficit hawk when they don't control the White House.” — Ritholtz [19:28]

• Stressed difficulties in maintaining policy objectivity amid tribal politics and the shifting Overton Window.

Inside Moody’s and the GFC

Navigating Moody’s During Crisis

• Zandi joined Moody’s shortly after selling his firm, published critical analyses of subprime mortgages (received pushback but ultimately contributed to Moody’s credibility during Congressional inquiries).
• Notable:

  “I wrote a paper on the subprime mortgage space and did everything but say, ‘these securities should be downgraded...’” — Zandi [27:12]

• Lived through the madness of 2008:

  “I can remember a few scary, real scary moments... a CEO of a major retailer saying, if we don't do something, he's not going to be able to make payroll.” — Zandi [31:08]

Moody’s Analytics Today

• Focuses on economic forecasting and scenario analysis, increasingly for regulatory stress testing (CECL, IFRS 9, climate risk).

  “We produce economic forecasts and scenarios… the regulatory environment has been a tailwind to our work.” — Zandi [33:10]

Contemporary Economic Analysis

State of the US Economy (as of Q3 2025)

Signals of Weakness

• Zandi has shifted to a more cautious view:

  “The economy's struggling. I think it's on the precipice of recession.” — Zandi [41:33]

• Weak GDP (barely 1% annualized in first half), stagnant consumer spending, broad-based recessions in manufacturing, construction, transportation.
• Construction is declining across most segments, even as demand remains; affordability and rate sensitivity are biting.

Labor Market

• Slowing job growth; negative population trends may mean even flat or declining total nonfarm payrolls.

  “The job numbers are showing very little job growth in recent months. ...I would not be surprised if we saw some negative numbers.” — Zandi [45:26]

• Immigration restrictions contribute to labor tightness and inflation.

Stock Market vs Economy

• Despite economic sluggishness, stock indices remain near all-time highs, driven in part by AI (not the broader economy), global corporate earnings, and tax policy.

  “The stock market at best is flat from where it is at the beginning of the year. And that's the economy. It's flat.” — Zandi [49:16]

Fiscal Stimulus and Policy Direction

• Possible further fiscal action (e.g., stimulus checks funded by tariff revenue), but risks inflation if economy is at full employment:

  “If you overstimulate and you're at full employment, you're going to get the inflation…” — Zandi [52:25]

Critical Policy Issues

Tariffs

• Unambiguous opposition to broad, non-strategic tariffs:

  “I’m not a fan of broad based tariffs… We’ve done that. …It didn't work out so well. It takes about 100 years for us to forget the mistake and do it again.” — Zandi [53:00]

• Tariffs are inflationary and contractionary; current climate reminiscent of 1970s stagflation.

Immigration

• Reduction in legal immigration increases labor scarcity and upward wage pressure, adding to inflation.

Fed Policy & Independence

• Fed is paralyzed between weak growth and looming inflation; sees a shift toward weighting growth over inflation, with concern over political encroachment on Fed independence:

  “I think this is a real, potentially a real significant problem. And the independence of the Fed is critical to a well functioning market economy like our own.” — Zandi [61:55]

On Data Quality and Revisions

• Still trusts BLS/BEA data, though notes survey response rates and revision patterns. Suggests negative revisions to payrolls signal the economy turning.

Notable Quotes & Memorable Moments

• On polarization in economics:

  “I know I’m going to sound political. I don’t mean to be political. I’m doing my very best not to be political.” — Zandi [22:34]

• On the unique period of the GFC:

  “For an economist, I mean, this was just an incredible time. Once every century you see something like this...” — Zandi [32:15]

• On the 2020s:

  “It feels very much like the 2010s was the era of monetary stimulus, and the 2020s seems to be the era of fiscal stimulus.” — Ritholtz [18:01]

• On “the Trump collar”:

  “When the stock market is doing well, he takes that as his report card. …The last thing you want to do is go into recession and get blamed for the recession in the context of all those...” — Ritholtz [61:28]

• On advice to young economists:

  “Just show up. Show up, show up. …Every point of contact matters.” — Zandi [69:08]

Timestamps for Major Segments

• [02:45] – Zandi’s academic and family background
• [05:17] – Founding his first firm, focus on regional economics
• [08:33] – Building economy.com and the dot-com era
• [10:24] – Sale to Moody’s Analytics: price, serendipity, and strategic fit
• [12:12] – Early warnings on the housing bubble
• [15:27] – White House economic advising, “multiplier” analysis
• [18:01] – Fiscal stimulus in the 2020s vs monetary in the 2010s
• [19:41] – Deficit “hawks” and political partisanship
• [21:56] – Balancing nonpartisanship as an economist
• [27:12] – Subprime crisis, internal pushback at Moody’s
• [31:08] – Stories from the 2008 financial crisis
• [33:10] – The economic and regulatory focus at Moody’s Analytics today
• [41:33] – Current (2025) economic outlook: on the edge of recession
• [43:39] – Affordability crisis and construction slump
• [45:26] – Labor market: expected job declines and demographic drag
• [53:00] – Tariffs and immigration policy’s economic impact
• [54:58] – Fed’s policy conundrum: stagflation risks, political overlay
• [58:13] – Data integrity and BLS revisions as forward indicators
• [61:55] – Most overlooked issue: Fed independence

Memorable/Light Moments

• [05:02] – Punch card mainframe stories: “You’d punch a card... take it down to some guy... 12 hours... if you messed up, you had to wait another 12 hours…”
• [10:16] – “I gave him a price and he took it right away. And I go, too little, too low.’
• [65:07] – Zandi on the importance of grip strength: “One of the ways you improve your grip strength is literally hanging... I can’t get to two minutes.”

Further Reading & Recommendations

• Books:
  • “Alexander Hamilton” by Ron Chernow (“I love Alexander Hamilton by Charnow. I mean, I. That was...” — Zandi [63:23])
  • “Outlive” (“How do you live your life? Well, long run…” [64:34])
• TV:
  • “Disclaimer”, “Killing Eve”, “The Gilded Age”, “Department Q” — discussed with humor and streaming fatigue.

Summary Takeaways

• Mark Zandi’s career arc exemplifies a rare mix of technical economic expertise, entrepreneurial risk-taking, and big-league institutional impact.
• The American economy in late 2025 is, per Zandi, “on the precipice of recession” with substantial real-world weakness masked by headline stock market strength.
• Major risks stem from restrictive immigration policy and broad tariffs, both feeding inflation and slowing growth, while the Fed is hemmed in by political and economic cross-currents.
• Zandi’s insistence on data-driven, centrist analysis stands out in an era of institutional mistrust and partisanship.

For listeners seeking a candid, empirically-rooted, and accessible guide to where the US economy stands in 2025—and the forces shaping our near future—this episode delivers uncommon depth, clarity, and character.