These States Are Least Prepared for a Recession

As tariffs trigger recession alarms, some of the most populous states are the least prepared for an economic downturn, according to a recent report.

Tariff uncertainty has taken financial markets on a wild ride, squashed consumer and business confidence, and fueled fears about the possibility of a coming recession. They also spurred a surge of imports as people rushed to beat the tariffs, which resulted in negative economic growth for the first time since 2022.

The U.S. economy is likely not officially in a recession yet. The National Bureau of Economic Research, the nonprofit research group that officially calls U.S. recessions, only does so once a recession has already set in, because it uses backward-looking data. However, two consecutive quarters of negative economic growth typically indicate a recession is in progress.

Millions of Americans live in states that are vulnerable to a recession, and the majority of states with the highest populations rank as least prepared for an economic downturn, according to a report released Wednesday by National Business Capital.

This analysis utilized economic data from each state to determine which was in the best position to survive a recession. States that were better prepared to weather a recession typically had higher government reserves, GDP per capita, and safety net coverage as well as lower unemployment rates and lower housing prices.

Mountain and Southern states proved to be the least resistant to a recession. National Business Capital’s report said that, in recent years, those regions experienced a migration and housing boom that drove up the cost of living and hurt household budgets.

In particular, Louisiana is the state most vulnerable to a recession, the study found. It already has a higher unemployment rate than most other states, and Louisiana’s government reserves are the lowest of all 50 states. It also has some of the worst safety-net coverage for residents through programs like unemployment insurance. In addition, the housing in the state is some of the least affordable in the country.

Colorado, Mississippi and South Carolina were also particularly ill-equipped to withstand a recession, the study found.

The most resilient states are primarily in the northern Great Plains region, with North Dakota being the most recession-resistant, according to the study. The state’s high GDP relative to population and government reserves, combined with low unemployment, comparatively lower cost of living, and “decent” safety-net coverage, make it the most prepared state in the company’s study.