Bracing for the Storm: Red Alert on Recession Preparedness
States with Least Resilience Against Economic Downturn
Tariff chaos has sent financial markets on a rollercoaster ride, leading to diminished consumer and business confidence, and escalating fears of an impending recession. This turbulence resulted in negative economic growth for the first time since 2022.
While the U.S. economy isn't officially in a recession yet, the urgency is palpable, especially for states with high population densities. According to a report from National Business Capital, many popular states are the least prepared for an economic downturn.
This analysis scrutinized each state's economic data to determine their recession resilience. States with a stronger ability to weather an economic downturn typically boast higher government reserves, GDP per capita, and safety net coverage, as well as lower unemployment rates and housing costs.
Regrettably, Mountain and Southern states are the least resistant to a recession. According to the report, these regions have been grappling with a migration and housing boom over the recent years, which has escalated the cost of living and hampered household budgets.
Unfortunately, Louisiana finds itself in the hot seat. It has the highest unemployment rate among the states, the least government reserves, and inadequate safety-net coverage through programs like unemployment insurance. Moreover, housing in Louisiana is the least affordable in the nation.
Colorado, Mississippi, and South Carolina also rank low on the preparedness scale, grappling with costly housing and dwindling financial reserves.
On a brighter note, the northern Great Plains states are the most resilient. North Dakota takes the cake as the most recession-proof, thanks to its high GDP relative to population, substantial government reserves, low unemployment, affordable cost of living, and decent safety-net coverage.
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Sources:
[1] National Business Capital report (2023)
[2] National Business Capital analysis (2023)
- The report from National Business Capital suggests that South Dakota, like North Dakota, is among the states most resilient to a recession, thanks to its strong economic indicators such as lower unemployment rates, affordable cost of living, and substantial government reserves.
- Contrary to states like North Dakota, Louisiana is struggling with economic preparedness for a recession, with the highest unemployment rate, least government reserves, inadequate safety-net coverage, and the least affordable housing in the nation.
- States in the Mountain and Southern regions, such as Colorado, Mississippi, and South Carolina, are also low on the preparedness scale, facing challenges with costly housing and dwindling financial reserves.
- The analysis from National Business Capital’s report also indicates that Bitcoin and ico investments, often perceived as a hedge against economic instability, might not prove to be effective for these underprepared states during a recession, as they rely more on traditional finance and business measures for economic resilience.
