The States That Are Best Prepared to Weather the Next Recession

It's only a matter of time before the next economic downturn comes along. How ready is your state?

Storm gathering over large city.Steve Nahuysen / Shutterstock.com

We’d like to think we can avoid another recession, but we can’t. Economic expansion followed by recession is simply the way things work in a capitalist society.

Since we know it’s not a question of if, but rather when, a recession hits, we all need to be prepared. For families, that means having an adequate emergency fund. For states, it requires putting enough into reserves to ride out a downturn.

Moody’s Analytics analyzed state reserves to see how well they would weather a moderate recession. The group compared actual reserves, as a percentage of state revenues, with the necessary reserves a state would require to comfortably withstand an economic downturn. (How much a given state needs to hold in reserve varies depending on particular economy and tax structure.) While 16 states are looking good and 19 states could probably squeak by, there are 15 states that are going to be in serious trouble if we have a recession in the next one to two years.

Here’s a ranking of all 50 states — starting with those best prepared for recession according the reserves that they hold and ending with states that need to start saving ASAP. Find out where your state stands.

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