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Only A Third Of The Country Is Ready For The Next Downturn

Recent studies reveal that only a handful of U.S. states are prepared for the next recession.

According to a Moody’s Analytics report, only 16 states in the country have enough funds in their reserves to sustain themselves in the case of a depression.


Alaska led the pack of the most prepared states with nearly three times more money in its reserves than it would need to maintain its economy during a recession, the Wall Street Journal reports. Louisiana, one of the least prepared states, was missing about a quarter of the money it would need to sustain its economy.

Oil- and gas-rich states, including Alaska, Wyoming and Texas, were found to be the most financially prepared in the country, likely because of their experience weathering the current oil price downturn that began in summer 2014, as well as the 1980s downturn that led some lawmakers to prepare backup funds should a similar situation occur.

Eight years after the last downturn, state and local government employment has failed to return to pre-recession levels and has remained stagnant at around 300,000 employees, Moody's reports. This lack of government officials could be a contributing factor in the inability of some states to prepare for another financial collapse.

Fifteen states came in on the low end of the spectrum, registering a 5% loss in the backup funds needed to keep their economies afloat in the case of a drop in tax revenue and a spike in state services demand.