According to US Census Bureau data, the financial crisis of 2008 wiped out over 170,000 small businesses. 2.6 million people lost their jobs during the recession, and the stock market erased $6.9 trillion in wealth. Losses were so severe that recession’s true cost is still unknown.
Some experts are predicting that the next big recession is just around the corner. Your business’ location can make the difference between continued success and having to close down during the next recession.
We compiled publicly available data from sources such as the Bureau of Labor Statistics, Bureau of Economic Analysis, and the Federal Deposit Insurance Corporation. We then analyzed the data for each state to put together a definitive ranking of which states are most likely to beat the next recession.
To rank each state, we chose ten categories that significantly influence a state’s ability to weather an economic downturn:
- The State’s Existing Debt Level
- Unemployment Rate
- Fiscal Balance (Deficit vs Surplus)
- Stability of the State’s Housing Market
- The State’s Dependence on Exports
- Diversity of the State’s Economy
- Per Capita Saving/Checking/Investment Deposits in the State
- Average Credit Card Debt for a Resident of the State
- State Income Tax Rate
- State’s Performance during the 2008 Recession
Read on to see which states made the top 10. We also list our definitive ranking of all 50 states below.
1. North Dakota
No other state managed to deliver stellar performances in as many categories as North Dakota. The Peace Garden State showed exceptional performances in eight out of ten metrics with six metrics ranking in the top five. North Dakota came first in the unemployment category, after posting the lowest unemployment rate of 2.3 percent. It ranked second in state debt with a debt to income ratio of just 1.24. The state also operates at a fiscal surplus, coming in third for fiscal balance. Even more impressive, its GDP grew by 2.13 percent during the height of the recession from 2008 to 2009.
North Dakota’s standing at the top spot may come as a surprise to many as the state heavily depends on oil fracking. Indeed, North Dakota came dead last for dependence on exports. However, its performance in the categories mentioned above (unemployment, state debt, fiscal balance, etc.) more than made up for its poor showing in this area. In fact, the oil boom in North Dakota is primarily responsible for the state’s low unemployment and strong economic growth. The same is true for other midwestern states, like South Dakota and Oklahoma, which also made our top 10.
Best City to Beat a Recession: Fargo
Fargo, ND is the home of Microsoft and Case New Holland. The city contributed $15.35 billion to the state’s economy in 2015, bolstered by contributions from agriculture and technology. The city also has a high quality, skilled workforce with 34.5 percent of its population holding a college degree, keeping unemployment rate low at 2.3 percent.
2. Nebraska
Nebraska touts the most diverse economy in the country. Its top industry Agriculture, Forestry, Fishing, and Hunting makes up only a mere 4.97 percent of the state’s GDP. In fact, the top five industries in the state comprise a modest total of 22.20 percent of the state’s economy, indicative of a balanced contribution from multiple industries. Also, the Cornhusker state placed second in average credit card debt, with residents holding an average debt of $4,833. The unemployment rate is the fourth lowest in the country at 2.9 percent. Moreover, the state has the fourth lowest debt level in the country with a debt to income ratio of 1.26.
Best City to Beat a Recession: Omaha
Omaha may not be Nebraska’s capital, but it is the state’s largest city with a bustling economy. The city is home to over 20,400 businesses, including Fortune 500 companies Berkshire Hathaway, Union Pacific, and ConAgra. It contributed a whopping $59.09 billion to Nebraska’s economy in 2015, spurred by production from banking, insurance, and telecommunications.
The unemployment rate stands at just 3.2 percent, and households have an average income of $60,566 which is slightly above the state average of $60,474. Omaha’s labor force features a combination of traditional American hard work and modern education. Its workforce is known to possess a ‘roll up your sleeves’ work ethic, plus 34.7 percent of its population are college degree holders.
3. South Dakota
South Dakota, coming in at third overall, had the highest deposits per capita, amounting to $524,910. It is also one of seven states to rank first for highest marginal income tax rate with a 0 percent state income tax rate. This certainly help its citizens to save more money! This may also explain the state’s third place finish in credit card debt with an average debt per person of just $4,851. The Mount Rushmore State also posted strong performances in unemployment and fiscal balance, placing sixth in both categories.
Best City to Beat a Recession: Sioux Falls
South Dakota’s largest city has helped catalyze growth in the southern region, thanks to its diversified economy, led by financial services, retail, and healthcare. Sioux Falls produced $18.73 billion in 2015, which is roughly a third of the state’s economy. The cost of doing business in the city is 23 percent below the national average, which is helpful to keep businesses chugging along in a recession. Furthermore, college attainment is moderately high at 31.7 percent of the population, which keeps the unemployment rate at a low 2.5 percent. Households in Sioux Falls have an average income of $61,871 which is significantly above the state average of $55,065.
4. Arkansas
The Natural State did well across the board, finishing within the top 25 in 7 out of 10 categories. It garnered a strong fifth place ranking in the housing market category with one of the most affordable average list prices at $188,521. The state also has a low debt to income ratio at 1.307, landing the ninth spot in the state debt category.
Best City to Beat a Recession: Fayetteville
Fayetteville, Arkansas’ third largest city, generated a total GDP of $26.03 billion in 2015, roughly a fifth of the state’s GDP, buoyed by two major industries: technology and education. It is one of the fastest growing cities in Arkansas with over 3,500 booming companies. Households earn an average of $51,369 which is dramatically higher than the state average of $42,798. The college attainment rate is 30.8 percent, which helps maintain a low 2.8 percent unemployment rate.
5. Oklahoma
Oklahoma’s economy is the third most diverse in the country, with its top five contributors sharing a total of 43.87 percent of the state’s GDP. The state’s manageable debt to income ratio of 1.253 ranked fourth in the state debt category. Oklahoma’s real estate market is also economical with a median listing price of $200,699, finishing eighth in the housing market category. Fiscal balance is another strong area for the Sooner State, coming in at number nine with revenues that amount to 104.80 percent of expenses.
Best City to Beat a Recession: Oklahoma City
Oklahoma City is one of the most entrepreneurial cities in the country. It sustains over 18,600 small businesses, roughly twice the national average for US metropolitan areas. The cost of running a business is nearly 5 percent lower than the national average, which helps attract entrepreneurs. The city pumped $72.02 billion to the state’s economy, spurred by growth in technology and energy. Households take home an average of $55,100, a figure significantly higher than the state’s median household income of $47,077.
6. Kansas
The state of Kansas posted solid performances in three heavyweight categories, bolstering its overall rankings to grab the sixth spot. Kansas boasted the third lowest income to debt ratio at 1.253. It had an affordable real estate market, with an average list price of $189,528.00 to come in sixth in the housing market category. And at 3.7 percent, the Sunflower State’s unemployment rate is the sixteenth lowest in the country.
Best City to Beat a Recession: Wichita
The largest city in Kansas contributed $31.47 billion to the state’s economy in 2015. Its primary industries are aviation and healthcare. Nonetheless, the city is slowly diversifying its economy as companies in the hospitality, service, and utility sectors are major contributors to the over 20,000 jobs that have been added since 2011. In Wichita, the median household income stands at $54,874 which is at par with the state’s average.
7. Iowa
Iowa landed the seventh spot on our list of recession proof states, thanks to its outstanding rankings in four categories. The state had the lowest average credit card debt in the country at $4,734. At a median listing cost of $186,512, it ranked third in housing market. Also, its debt to income ratio is reasonable at 1.292, which placed it in seventh place for state debt. Finally, the Hawkeye State had the tenth lowest unemployment rate at 3.2.
Best City to Beat a Recession: Des Moines
Des Moines is home to giant financial services companies such as Wells Fargo, Principal Financial Group, and EMC Insurance. The city has a surging economy that has outgrown the country as a whole by 68 percent, thanks in part to its relatively low business costs, 18 percent below the US average. It has generated a total GDP of 46.56 billion in 2015. Its residents enjoy a high median household income of $65,366, a number significantly higher than state average of $60,855. Unemployment is low at 3.0 percent, while college attainment among the population is high at 35.1 percent.
8. West Virginia
The Mountain State came in at number eight overall, buoyed by first place rankings in two heavyweight categories. West Virginia had the lowest debt to income ratio in the country at 1.209. Its housing market is the most affordable in the country, with an average list price of $172,836. It is also interesting to note that during the 2008 – 2009 recession, the state’s GDP actually grew by 0.07 percent to rank ninth in the recent recession performance category.
Best City to Beat a Recession: Charleston
The capital of West Virginia has abundant natural resources, including salt, natural gas, and coal. Charleston added $13.70 billion to the state’s economy in 2015, with major contributions coming from trade, healthcare, and education. Residents of Charleston enjoy an average household income of $44,216 which is $1392 higher than the average household income in the state.
9. Wyoming
The Equality State takes the ninth spot overall, spurred by rankings in the top 25 in 9 out of 10 categories. Just like South Dakota, Wyoming does not charge income taxes to its citizens to also rank first in this category. Even though the state government does not collect income taxes, Wyoming manages to rank second in fiscal balance, generating revenues equivalent to 129.30 percent of its expenses.
Best City to Beat a Recession: Casper
Casper, Wyoming’s Oil City, has a booming small business economy with an average business revenue of $1.15 million according to a survey conducted in 2015. Many of its residents are hopping on the bandwagon. With a modest population of 82,200, it managed to produce a total GDP of $6.07 billion in 2015, sustained by thriving energy and financial services industries.
10. Indiana
Indiana rounds out our top ten, posting strong performances in three heavyweight categories. Its real estate market is the fourth most economical in the country, with an average list price of $186,751. The state’s unemployment rate of 3 percent is the country’s sixth lowest. Also, Indiana has a manageable debt to income ratio of 1.336 to rank eleventh in the state debt category.
Best City to Beat a Recession: Indianapolis
The largest city in the state produced an impressive total GDP of $134.08 billion in 2015. Also, the city boasts a diverse economy with balanced contributions from its major industries such as education, healthcare, finance, and tourism. A high college attainment rate of 32.9 percent has contributed to the city’s low unemployment rate of 2.9 percent. The median household income stands at $54,939, a figure higher than the state average of $51,983.
Definitive Ranking of All 50 States
1 | North Dakota | 1.24 | 2.3 | 123 | 226,168 | 77 |
2 | Nebraska | 1.26 | 2.9 | 105 | 224,260 | 23 |
3 | South Dakota | 1.39 | 3 | 106 | 235,080 | 38 |
4 | Arkansas | 1.31 | 3.4 | 102 | 188,521 | 20 |
5 | Oklahoma | 1.25 | 4.3 | 105 | 200,699 | 28 |
6 | Kansas | 1.25 | 3.7 | 101 | 189,528 | 18 |
7 | Iowa | 1.29 | 3.2 | 103 | 186,512 | 28 |
8 | West Virginia | 1.21 | 4.6 | 104 | 172,836 | 31 |
9 | Wyoming | 1.46 | 3.9 | 129 | 277,355 | 17 |
10 | Indiana | 1.34 | 3 | 102 | 186,751 | 33 |
11 | Missouri | 1.39 | 3.8 | 101 | 201,399 | 37 |
12 | Wisconsin | 1.3 | 3.1 | 102 | 220,743 | 31 |
13 | Utah | 1.92 | 3.4 | 110 | 456,208 | 25 |
14 | Florida | 1.6 | 4.1 | 105 | 395,575 | 7 |
15 | Texas | 1.41 | 4.6 | 106 | 323,378 | 40 |
16 | Mississippi | 1.29 | 5 | 103 | 191,115 | 21 |
17 | New Hampshire | 1.62 | 2.9 | 101 | 313,339 | 14 |
18 | Tennessee | 1.5 | 3.6 | 104 | 257,383 | 28 |
19 | Montana | 1.58 | 3.9 | 111 | 320,525 | 47 |
20 | Alabama | 1.44 | 4.6 | 103 | 208,222 | 20 |
21 | Minnesota | 1.61 | 3.7 | 102 | 290,944 | 21 |
22 | Idaho | 1.81 | 3.1 | 106 | 327,929 | 19 |
23 | Maine | 1.54 | 3.5 | 103 | 270,987 | 47 |
24 | Colorado | 1.96 | 2.3 | 103 | 517,045 | 18 |
25 | South Carolina | 1.57 | 4 | 104 | 289,565 | 20 |
26 | Pennsylvania | 1.41 | 5 | 100 | 224,017 | 27 |
27 | Virginia | 1.98 | 3.7 | 103 | 347,641 | 18 |
28 | Vermont | 1.51 | 3.2 | 102 | 300,459 | 40 |
29 | Rhode Island | 1.56 | 4.2 | 102 | 401,310 | 23 |
30 | North Carolina | 1.64 | 4.2 | 104 | 271,884 | 21 |
31 | Michigan | 1.35 | 3.8 | 100 | 207,896 | 43 |
32 | Ohio | 1.33 | 5 | 101 | 185,974 | 39 |
33 | Louisiana | 1.41 | 5.5 | 102 | 230,677 | 16 |
34 | Illinois | 1.47 | 4.7 | 94 | 275,393 | 27 |
35 | Georgia | 1.66 | 4.8 | 101 | 291,978 | 16 |
36 | Alaska | 1.8 | 6.8 | 138 | 267,876 | 27 |
37 | Nevada | 1.66 | 4.7 | 102 | 320,179 | 40 |
38 | Delaware | 1.63 | 4.7 | 101 | 295,702 | 13 |
39 | Kentucky | 1.34 | 5.1 | 99 | 211,346 | 26 |
40 | Maryland | 1.85 | 4.1 | 99 | 359,817 | 16 |
41 | New York | 1.54 | 4.5 | 99 | 579,581 | 17 |
42 | Massachusetts | 1.85 | 4.3 | 96 | 595,743 | 12 |
43 | Washington | 1.86 | 4.5 | 101 | 373,518 | 20 |
44 | New Mexico | 1.61 | 6.4 | 100 | 246,353 | 43 |
45 | New Jersey | 1.68 | 4.1 | 92 | 362,025 | 20 |
46 | Arizona | 1.79 | 5.1 | 103 | 317,788 | 38 |
47 | Connecticut | 1.64 | 5 | 97 | 473,373 | 14 |
48 | Hawaii | 2.10 | 2.7 | 96 | 898,596 | 61 |
49 | Oregon | 1.89 | 3.7 | 100 | 409,270 | 26 |
50 | California | 2.34 | 4.7 | 98 | 689,145 | 15 |
1 | North Dakota | 11 | 34,000 | 4,932 | 3.22 | 2.1 |
2 | Nebraska | 5 | 33,000 | 4,833 | 6.84 | 1.3 |
3 | South Dakota | 15 | 525,000 | 4,851 | 0 | 0.9 |
4 | Arkansas | 14 | 20,000 | 5,317 | 7 | -2.5 |
5 | Oklahoma | 11 | 21,000 | 5,728 | 5.25 | -2.2 |
6 | Kansas | 15 | 24,000 | 5,647 | 4.8 | -4.1 |
7 | Iowa | 18 | 26,000 | 4,734 | 8.98 | -2.1 |
8 | West Virginia | 13 | 17,000 | 5,123 | 6.5 | 0.1 |
9 | Wyoming | 22 | 26,000 | 5,716 | 0 | -1.7 |
10 | Indiana | 29 | 18,000 | 5,288 | 3.4 | -6.3 |
11 | Missouri | 13 | 27,000 | 5,431 | 6 | -2 |
12 | Wisconsin | 18 | 25,000 | 5,142 | 7.65 | -2.7 |
13 | Utah | 13 | 182,000 | 5,532 | 5 | -2 |
14 | Florida | 16 | 26,000 | 5,754 | 0 | -5.5 |
15 | Texas | 14 | 28,000 | 5,960 | 0 | -0.6 |
16 | Mississippi | 16 | 17,000 | 5,198 | 5 | -4.1 |
17 | New Hampshire | 14 | 24,000 | 5,939 | 5 | -1.2 |
18 | Tennessee | 16 | 21,000 | 5,492 | 6 | -3.6 |
19 | Montana | 14 | 21,000 | 5,283 | 6.9 | -1.8 |
20 | Alabama | 17 | 20,000 | 5,548 | 5 | -3.5 |
21 | Minnesota | 14 | 40,000 | 5,565 | 9.85 | -4 |
22 | Idaho | 14 | 14,000 | 5,555 | 7.4 | -4.3 |
23 | Maine | 15 | 20,000 | 5,059 | 7.95 | -1.6 |
24 | Colorado | 14 | 23,000 | 6,323 | 4.63 | -2.1 |
25 | South Carolina | 17 | 16,000 | 5,653 | 7 | -3.8 |
26 | Pennsylvania | 13 | 29,000 | 5,646 | 3.07 | -2.9 |
27 | Virginia | 14 | 34,000 | 6,520 | 5.75 | 0 |
28 | Vermont | 14 | 20,000 | 5,781 | 8.95 | -2.1 |
29 | Rhode Island | 15 | 27,000 | 5,455 | 5.99 | -1.1 |
30 | North Carolina | 19 | 34,000 | 5,596 | 5.8 | -3.9 |
31 | Michigan | 19 | 20,000 | 5,079 | 4.25 | -8.4 |
32 | Ohio | 17 | 28,000 | 5,583 | 5.33 | -4.4 |
33 | Louisiana | 21 | 22,000 | 5,408 | 6 | 2.1 |
34 | Illinois | 13 | 37,000 | 5,935 | 3.75 | -2.6 |
35 | Georgia | 12 | 22,000 | 5,800 | 6 | -3.8 |
36 | Alaska | 16 | 16,000 | 7,706 | 0 | 8.7 |
37 | Nevada | 15 | 70,000 | 5,715 | 0 | -8.1 |
38 | Delaware | 30 | 373,000 | 6,056 | 6.6 | 3.8 |
39 | Kentucky | 19 | 17,000 | 5,070 | 6 | -3.8 |
40 | Maryland | 17 | 23,000 | 6,448 | 5.75 | 0.1 |
41 | New York | 18 | 78,000 | 6,390 | 8.82 | 2.7 |
42 | Massachusetts | 14 | 52,000 | 5,672 | 5.15 | -1.8 |
43 | Washington | 14 | 20,000 | 6,241 | 0 | -3.3 |
44 | New Mexico | 13 | 15,000 | 5,514 | 4.9 | 0 |
45 | New Jersey | 17 | 35,000 | 6,013 | 8.97 | -4.2 |
46 | Arizona | 15 | 17,000 | 5,673 | 4.54 | -7.6 |
47 | Connecticut | 15 | 36,000 | 6,494 | 6.7 | 4.2 |
48 | Hawaii | 19 | 29,000 | 6,139 | 11 | -3.5 |
49 | Oregon | 22 | 17,000 | 5,769 | 9.9 | -1 |
50 | California | 17 | 32,000 | 5,769 | 13.3 | -4 |
Methodology
We based the ranking of the best states to survive a recession on 10 metrics. We then analyzed the data and assigned the following weights for each category based on the category’s importance:
1. State’s Existing Debt Level – 17.5 percent
If a recession hits the country today, state governments will need money to pass stimulus measures, inject cash into their local economies, and shore up safety net programs. States that already have high levels of debt will struggle to stay afloat. A recession could start a debt cycle where the state takes on more debt to settle delinquent accounts, and as a result, the state operates with budget deficits year after year.
For this metric, we ranked states based on their debt to income ratio. The higher the figure, the more debt the state has and the lower the ranking.
2. Unemployment – 17.5 percent
A high unemployment rate puts a state at a big disadvantage for battling a recession. Recessions hit the labor market hard and historically, it takes several years before stability is restored and employment is at full capacity. A high unemployment rate produces a domino effect, starting with decreased consumer confidence and consumer spending. The resulting economic environment causes more layoffs, and the cycle continues.
States that have the highest unemployment levels during a period of growth should be expected to significantly underperform in times of recession. On the other hand, states with low unemployment rates are in a better position to weather the next downturn.
3. Fiscal Balance – 15 percent
States that operate on a budget surplus have ready access to funds in case of an economic downturn. They are more equipped to handle a higher demand for services from their citizens. The surplus acts as a buffer that may absorb some of the shockwaves of a recession. On the other hand, states that have a budget deficit will have a more difficult time when the economy slides. They may have to take in more debt to meet the increased demand for services of their residents.
4. Housing Market – 10 percent
Even if the housing market doesn’t spark the next downturn, the industry is a good bellwether for the US economy and state economies. States that have expensive real estate markets should expect more losses when the recession hits, so the higher the average home list price in a state, the lower we ranked that state in our analysis.
Just like any market, demand fuels price growth. High demand usually means greater economic activity in the area. When the economy turns sour, people lose jobs as businesses declare bankruptcy. Those who purchased homes using credit during a period of growth may not be able to meet payment obligations during an economic pullback. As a result, they default on their loans and banks lose money. Financial institutions tighten credit regulations which make it difficult for citizens to revive the economy. This is a phenomenon observed during the last recession.
5. Dependence on Exports – 10 percent
When the US economy struggles, many other countries struggle as well, especially major trading partners. However, states that have multiple export partners are in a better position to withstand the negative effects of a recession, compared to states that are dependent on one other country. With multiple export partners, there are multiple ways to keep revenues coming in.
On the other hand, states that rely on one country for exports are exposed to greater risks. If the export partner struggles to cope with the recession, revenues will plummet as there are no other countries to pick up the slack.
6. Economic Diversity – 10 percent
In previous recessions, one major cause acted as the catalyst that broke down all sectors of the economy. In 2008, this was the housing sector. We don’t know what the catalyst will be in the next recession, but states that have diversified economies should be better able to absorb the aftershocks of a recession. As with exports, if one industry in a state crumbles, other industries can keep things going, at least to a certain extent.
For this metric, we allotted 5 percent to rank states based on concentration in the state’s most popular industry. Another 5 percent was allotted to rank states based on concentration in the top five industries. We believe this distribution provides a good estimate of the diversification of the state’s economy.
7. Deposits Per Capita – 7.5 percent
Citizens of states that ranked high in this metric have access to cash that can help cushion the blow of an economic pullback. The surplus may be instrumental in keeping the economy active and may even spur growth. To determine deposits per capita, we gathered total deposits for each state and divided it by the state’s population. Note that this doesn’t tell us the average deposits per person — rather, it gives deposits per capita, which can be skewed higher if there is a segment of wealthier people in the population.
8. Average Credit Card Debt – 5 percent
Residents of states that scored low in this category will struggle under a heavy debt load during a recession. They may take on more debt to meet obligations. The greater the debt load, the more time it takes for people to recover from an economic crunch. For this category, we gathered the average credit card debt for residents in each state.
9. State Income Tax Rate – 5 percent
People who live in states that don’t levy state income taxes or whose income tax rates are relatively low have more disposable income. They may use the extra money to save cash for a rainy day or spend it on goods and services. Either way, they have access to more access that may keep the local economy thriving.
Even though we decided to include this factor, we assigned it relatively low importance in our analysis because governments could pass emergency stimulus or tax credit measures in the immediate aftermath of a recession.
10. 2008 Recession Performance – 2.5 percent
We ranked states based on how their GDP performed from 2008 to 2009. We looked at the decrease or increase in GDP during the height of the great recession. Even though history tends to repeat itself, we allocated the least weight to this metric because past performance doesn’t necessarily translate to future performance. A state may have taken measures since 2008 to better prepare itself for a recession. We also don’t know if the next recession will be a real estate crash like the 2008 recession or will hit another sector of the economy.
Each of these 10 categories was given a weight based on its importance to weathering a recession. For example, factors such as states with most debt and fiscal balance were given more weight than credit card debt per capita and recent recession performance. We then added the product of all categories to come up with an overall score for each state and our final ranking.
Data Sources
State’s Existing Debt Level
To determine debt to income ratio per state, we divided the total debt per capita in each state provided by the Federal Reserve by the median individual income in each state provided by the U.S. Census Bureau’s 5-Year American Community Survey. We used 2015 data, which is the latest available, from these sources.
Unemployment Rate
We based this metric on data provided by the Bureau of Labor Statistics, released in June 2017.
State’s Fiscal Balance (Deficit vs Surplus)
The Pew Charitable Trusts, a non-profit organization which uses evidence-based non-partisan analysis, provided the data on each state’s fiscal balance. They analyzed data from each state’s audited comprehensive annual financial reports from 2002 to 2015 to come up with every state’s total revenue as a share of total expenses.
Stability of Housing Market
For this metric, we gathered data from Trulia, an online real estate site for buyers, sellers, and agents. We then ranked each state based on the average listing price for a home. The more expensive the list price, the lower the ranking. The latest data available was from June 21, 2017.
Dependence on Exports
We relied on data provided by the US Department of Commerce’s International Trade Administration (ITA). To determine ranking, we looked at total revenues generated from the state’s number one export partner by each state’s total value of exports. States that got high percentages received low rankings. The latest data available was from August 25,2017
Economic Diversity
This data were derived from the Bureau of Economic Analysis. We came up with two sets of rankings. First, we determined the percentage of GDP contributed by a state’s top industry. Second, we determined the percentage of GDP contributed by a state’s top 5 industries. We each assigned weights of five percent to each ranking. We used 2017 data for this metric.
Per Capita Deposits
For this variable, we sourced data from the Federal Deposit Insurance Corporation and US Census Bureau. To rank each state, we gathered total deposits for each state and divided it by the state’s population. The higher the per capita deposits, the higher the ranking. We used 2016 data for this category.
Although the source didn’t specify the type of deposits, they likely include savings accounts, checking accounts, and investment accounts.
Average Credit Card Debt
We used 2016 data provided by credit reporting agency TransUnion. States with higher average credit card debt per person received lower rankings.
State Income Tax Rate
TaxFoundation.org, the nation’s leading independent tax policy nonprofit, was our data source for state personal income tax rate. We used 2015 data for this metric. The lower the income tax rate, the higher the ranking.
GDP Performance During 2008 Recession
We sourced data from the Federal Reserve Bank for this category. To rank states in this category, we computed the percentage loss or gain of each state’s GDP from 2008 to 2009. We predicted that all states would show a drop in GDP from 2008 to 2009, but some states in the upper ranks actually showed an increase.
Bottom Line: Best States to Survive a Recession
Our research revealed that midwestern states are better equipped to weather the next recession, with North Dakota earning the number one spot. Unfortunately, the same couldn’t be said about coastal states, many of which fell to the bottom our list. What are your thoughts about the results of our research on the best states to survive a recession? Feel free to share your comments below.
Joseph Vranich
“Best States to Survive A Recession – Definitive Ranking of All 50 States” is a remarkable piece of analysis. I’ve often looked at State Debt as one piece of the puzzle in understanding fiscal stability (or lack thereof) and prospects of future tax increases. Congratulations on a great job.