Roughly half of U.S. states are effectively in a recession and ‘hanging on by their fingertips,’ Moody’s chief economist says

If it feels like you're living in a recession, then you might be in one of the contracting states identified by Moody's. (Credit: David Paul Morris—Bloomberg/Getty Images)

• ANALYSIS: Despite strong national figures—3.8% GDP growth and 4.3% unemployment—large parts of the U.S. are effectively in recession, according to Moody’s Analytics. Chief economist Mark Zandi exclusively told Fortune that 22 states are contracting and many lower- and middle-income households are “hanging on by their fingertips,” struggling with debt and slowing wage growth despite steady employment. Private data during the federal shutdown shows weakening consumer confidence, particularly among those earning under $35,000. Zandi warned that if economic softness spreads from smaller, manufacturing-heavy states to giants like California or New York, the national economy could tip into recession.

Everything should feel fine in the economy. Gross domestic product was up a healthy 3.8% in the past quarter, and unemployment has stayed at a steady 4.3%. So why does it seem so tough?