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States Least Prepared for the Recession

Alexandria Bova

Many American families and economists alike are often guessing as to when the next recession will hit the U.S. — and what will cause it. There are key indicators that could help predict the current health of the economy. Job growth, housing demands and consumer trends offer clues to determine the strength of the economy.

Before the coronavirus outbreak, the U.S. was actually experiencing one of the longest periods of economic expansion in its history — the unemployment rate had fallen to a 50-year low. Although it’s been a decade since the Great Recession, climbing out of that particular economic crisis took the country longer than expected. And while many households are thriving, some Americans haven’t bounced back as quickly as others.

Many generations have been permanently affected by the Great Recession. According to the Center of American Progress, millennials began entering the job market as the recession hit, which delayed larger financial decisions like buying a home. This continues to affect the current housing market, as many millennials still can’t afford to own a home. In addition, baby boomers had their retirement savings completely destroyed when the stock market crashed. But it seems Gen Xers were able to bounce back more quickly, as they were the only generation to recover the home equity lost in the economic downturn.

So what would happen if the U.S. economy were to sink into another recession in the near future? Would some states get hit harder than others? There is no way to truly determine when the next recession will come, but it’s important to be financially prepared when it does; especially seeing as many economists are predicting one to follow this global health crisis.

To determine which states are the most and least prepared for an economic downturn, GOBankingRates analyzed various factors within each state, including the current unemployment rate, labor force participation rate, population below the poverty line, long-term liabilities debt, average mortgage debt and homes with negative equity. Mississippi was found to be the state that is least prepared for an upcoming recession, with the second-highest average unemployment rate and 15% of its population below the poverty line. Discover whether your state is prepared for the next recession.

Last updated: Dec. 27, 2019

1. Mississippi

  • Average unemployment rate in 2019: 5.05%
  • Labor force participation rate: 56.6%
  • People whose income is below the poverty line: 15%
  • Long-term liabilities per capita: $3,036
  • Average mortgage debt: $121,608
  • Homes with negative equity: 4.05%

2. New Mexico

  • Average unemployment rate in 2019: 4.97%
  • Labor force participation rate: 56.2%
  • People whose income is below the poverty line: 15.1%
  • Long-term liabilities per capita: $3,977
  • Average mortgage debt: $160,967
  • Homes with negative equity: 3.3%

3. West Virginia

  • Average unemployment rate in 2019: 4.87%
  • Labor force participation rate: 53%
  • People whose income is below the poverty line: 13%
  • Long-term liabilities per capita: $4,194
  • Average mortgage debt: $110,729
  • Homes with negative equity: 4.05%

4. Alaska

  • Average unemployment rate in 2019: 6.37%
  • Labor force participation rate: 67.9%
  • People whose income is below the poverty line: 7.5%
  • Long-term liabilities per capita: $8,670
  • Average mortgage debt: $223,430
  • Homes with negative equity: $1.8%

5. Nevada

  • Average unemployment rate in 2019: 4.13%
  • Labor force participation rate: 63.6%
  • People whose income is below the poverty line: 9.1%
  • Long-term liabilities per capita: $1,697
  • Average mortgage debt: $225,095
  • Homes with negative equity: 3.7%

6. Hawaii

  • Average unemployment rate in 2019: 2.75%
  • Labor force participation rate: 65.6%
  • People whose income is below the poverty line: 5.7%
  • Long-term liabilities per capita: $12,056
  • Average mortgage debt: $344,819
  • Homes with negative equity: 1.8%

7. Louisiana

  • Average unemployment rate in 2019: 4.51%
  • Labor force participation rate: 58.9%
  • People whose income is below the poverty line: 13.6%
  • Long-term liabilities per capita: $4,133
  • Average mortgage debt: $151,763
  • Homes with negative equity: 10.3%

8. New York

  • Average unemployment rate in 2019: 3.95%
  • Labor force participation rate: 62.9%
  • People whose income is below the poverty line: 10%
  • Long-term liabilities per capita: $4,605
  • Average mortgage debt: $236,093
  • Homes with negative equity: 4.7%

9. Connecticut

  • Average unemployment rate in 2019: 3.72%
  • Labor force participation rate: 66%
  • People whose income is below the poverty line: 7.1%
  • Long-term liabilities per capita: $17,418
  • Average mortgage debt: $225,386
  • Homes with negative equity: 8.5%

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10. Kentucky

  • Average unemployment rate in 2019: 4.18%
  • Labor force participation rate: 59.3%
  • People whose income is below the poverty line: 12.6%
  • Long-term liabilities per capita: $9,960
  • Average mortgage debt: $126,310
  • Homes with negative equity: 4.5%

11. Arkansas

  • Average unemployment rate in 2019: 3.57%
  • Labor force participation rate: 57.9%
  • People whose income is below the poverty line: 12.7%
  • Long-term liabilities per capita: $2,986
  • Average mortgage debt: $128,842
  • Homes with negative equity: 5.5%

12. Wyoming

  • Average unemployment rate in 2019: 3.71%
  • Labor force participation rate: 65.8%
  • People whose income is below the poverty line: 7.1%
  • Long-term liabilities per capita: $3,989
  • Average mortgage debt: $184,625
  • Homes with negative equity: 3%

13. Florida

  • Average unemployment rate in 2019: 3.37%
  • Labor force participation rate: 58.7%
  • People whose income is below the poverty line: 9.7%
  • Long-term liabilities per capita: $2,199
  • Average mortgage debt: $187,440
  • Homes with negative equity: 5.6%

14. Maryland

  • Average unemployment rate in 2019: 3.75%
  • Labor force participation rate: 67.7%
  • People whose income is below the poverty line: 6%
  • Long-term liabilities per capita: $7,186
  • Average mortgage debt: $252,583
  • Homes with negative equity: 3.5%

15. Michigan

  • Average unemployment rate in 2019: 4.13%
  • Labor force participation rate: 61.5%
  • People whose income is below the poverty line: 9.5%
  • Long-term liabilities per capita: $1,883
  • Average mortgage debt: $132,523
  • Homes with negative equity: 4.8%

16. Delaware

  • Average unemployment rate in 2019: 3.37%
  • Labor force participation rate: 62.1%
  • People whose income is below the poverty line: 8.4%
  • Long-term liabilities per capita: $7,537
  • Average mortgage debt: $185,452
  • Homes with negative equity: 5.8%

17. New Jersey

  • Average unemployment rate in 2019: 3.61%
  • Labor force participation rate: 65.8%
  • People whose income is below the poverty line: 6.9%
  • Long-term liabilities per capita: $18,928
  • Average mortgage debt: $239,362
  • Homes with negative equity: 6%

18. Arizona

  • Average unemployment rate in 2019: 4.95%
  • Labor force participation rate: 59.8%
  • People whose income is below the poverty line: 9.9%
  • Long-term liabilities per capita: $2,194
  • Average mortgage debt: $202,148
  • Homes with negative equity: 3.8%

19. California

  • Average unemployment rate in 2019: 4.15%
  • Labor force participation rate: 63.9%
  • People whose income is below the poverty line: 9.1%
  • Long-term liabilities per capita: $5,642
  • Average mortgage debt: $363,537
  • Homes with negative equity: 2.1%

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20. Illinois

  • Average unemployment rate in 2019: 4.21%
  • Labor force participation rate: 65.4%
  • People whose income is below the poverty line: 8.5%
  • Long-term liabilities per capita: $12,816
  • Average mortgage debt: $177,150
  • Homes with negative equity: 7.1%

21. Massachusetts

  • Average unemployment rate in 2019: 2.96%
  • Labor force participation rate: 66.8%
  • People whose income is below the poverty line: 6.5%
  • Long-term liabilities per capita: $11,518
  • Average mortgage debt: $252,207
  • Homes with negative equity: 3.5%

22. Rhode Island

  • Average unemployment rate in 2019: 3.69%
  • Labor force participation rate: 63.8%
  • People whose income is below the poverty line: 9.1%
  • Long-term liabilities per capita: $5,717
  • Average mortgage debt: $185,646
  • Homes with negative equity: 5.5%

23. Iowa

  • Average unemployment rate in 2019: 2.45%
  • Labor force participation rate: 66.9%
  • People whose income is below the poverty line: 7.2%
  • Long-term liabilities per capita: $1,656
  • Average mortgage debt: $131,709
  • Homes with negative equity: 6.3%

24. Wisconsin

  • Average unemployment rate in 2019: 2.99%
  • Labor force participation rate: 66%
  • People whose income is below the poverty line: 7%
  • Long-term liabilities per capita: $2,589
  • Average mortgage debt: $138,935
  • Homes with negative equity: 4.7%

25. North Dakota

  • Average unemployment rate in 2019: 2.39%
  • Labor force participation rate: 69.6%
  • People whose income is below the poverty line: 5.7%
  • Long-term liabilities per capita: $3,509
  • Average mortgage debt: $162,702
  • Homes with negative equity: 4.7%

26. Washington

  • Average unemployment rate in 2019: 4.58%
  • Labor force participation rate: 64.6%
  • People whose income is below the poverty line: 6.3%
  • Long-term liabilities per capita: $8,169
  • Average mortgage debt: $262,641
  • Homes with negative equity: 1.5%

27. Montana

  • Average unemployment rate in 2019: 3.55%
  • Labor force participation rate: 63.6%
  • People whose income is below the poverty line: 7.7%
  • Long-term liabilities per capita: $2,247
  • Average mortgage debt: $180,926
  • Homes with negative equity: 2.5%

28. Virginia

  • Average unemployment rate in 2019: 2.84%
  • Labor force participation rate: 65.4%
  • People whose income is below the poverty line: 7.1%
  • Long-term liabilities per capita: $1,714
  • Average mortgage debt: $242,794
  • Homes with negative equity: 3.8%

29. Tennessee

  • Average unemployment rate in 2019: 3.34%
  • Labor force participation rate: 61.3%
  • People whose income is below the poverty line: 11.3%
  • Long-term liabilities per capita: $641
  • Average mortgage debt: $155,844
  • Homes with negative equity: 3.3%

30. Oklahoma

  • Average unemployment rate in 2019: 3.24%
  • Labor force participation rate: 61.2%
  • People whose income is below the poverty line: 11.4%
  • Long-term liabilities per capita: $609
  • Average mortgage debt: $134,244
  • Homes with negative equity: 2.1%

31. Ohio

  • Average unemployment rate in 2019: 4.25%
  • Labor force participation rate: 63.1%
  • People whose income is below the poverty line: 9.7%
  • Long-term liabilities per capita: $3,243
  • Average mortgage debt: $122,765
  • Homes with negative equity: 4.9%

32. North Carolina

  • Average unemployment rate in 2019: 4.05%
  • Labor force participation rate: 62.4%
  • People whose income is below the poverty line: 10.2%
  • Long-term liabilities per capita: $938
  • Average mortgage debt: $162,366
  • Homes with negative equity: 3%

33. Idaho

  • Average unemployment rate in 2019: 2.86%
  • Labor force participation rate: 62.1%
  • People whose income is below the poverty line: 8.2%
  • Long-term liabilities per capita: $963
  • Average mortgage debt: $169,603
  • Homes with negative equity: 1.9%

34. Indiana

  • Average unemployment rate in 2019: 3.44%
  • Labor force participation rate: 64%
  • People whose income is below the poverty line: 9.3%
  • Long-term liabilities per capita: $2,155
  • Average mortgage debt: $120,354
  • Homes with negative equity: 2.1%

35. Maine

  • Average unemployment rate in 2019: 3.18%
  • Labor force participation rate: 62.9%
  • People whose income is below the poverty line: 7.3%
  • Long-term liabilities per capita: $2,812
  • Average mortgage debt: $136,963
  • Homes with negative equity: 7.7%

36. Pennsylvania

  • Average unemployment rate in 2019: 3.94%
  • Labor force participation rate: 62.8%
  • People whose income is below the poverty line: 8.1%
  • Long-term liabilities per capita: $3,109
  • Average mortgage debt: $145,206
  • Homes with negative equity: 3.4%

37. South Dakota

  • Average unemployment rate in 2019: 2.9%
  • Labor force participation rate: 68.2%
  • People whose income is below the poverty line: 8%
  • Long-term liabilities per capita: $650
  • Average mortgage debt: $150,913
  • Homes with negative equity: 4.05%

38. Minnesota

  • Average unemployment rate in 2019: 3.23%
  • Labor force participation rate: 69.2%
  • People whose income is below the poverty line: 5.7%
  • Long-term liabilities per capita: $2,458
  • Average mortgage debt: $175,085
  • Homes with negative equity: 2.8%

39. Alabama

  • Average unemployment rate in 2019: 3.44%
  • Labor force participation rate: 56.8%
  • People whose income is below the poverty line: 12.2%
  • Long-term liabilities per capita: $2,118
  • Average mortgage debt: $140,659
  • Homes with negative equity: 3.6%

40. Georgia

  • Average unemployment rate in 2019: 3.7%
  • Labor force participation rate: 63.1%
  • People whose income is below the poverty line: 10.8%
  • Long-term liabilities per capita: $2,302
  • Average mortgage debt: $174,275
  • Homes with negative equity: 3.4%

41. Oregon

  • Average unemployment rate in 2019: 4.18%
  • Labor force participation rate: 62.6%
  • People whose income is below the poverty line: 8%
  • Long-term liabilities per capita: $3,283
  • Average mortgage debt: $224,503
  • Homes with negative equity: 1.6%

42. Texas

  • Average unemployment rate in 2019: 3.56%
  • Labor force participation rate: 64.5%
  • People whose income is below the poverty line: 11.4%
  • Long-term liabilities per capita: $3,474
  • Average mortgage debt: $176,736
  • Homes with negative equity: 1.7%

43. South Carolina

  • Average unemployment rate in 2019: 3.21%
  • Labor force participation rate: 60.3%
  • People whose income is below the poverty line: 10.8%
  • Long-term liabilities per capita: $1,311
  • Average mortgage debt: $159,359
  • Homes with negative equity: 3.8%

44. Nebraska

  • Average unemployment rate in 2019: 2.97%
  • Labor force participation rate: 69.1%
  • People whose income is below the poverty line: 7.1%
  • Long-term liabilities per capita: $282
  • Average mortgage debt: $139,626
  • Homes with negative equity: 4%

45. Missouri

  • Average unemployment rate in 2019: 3.23%
  • Labor force participation rate: 62.5%
  • People whose income is below the poverty line: 9%
  • Long-term liabilities per capita: $1,809
  • Average mortgage debt: $139,320
  • Homes with negative equity: 3.7%

46. Vermont

  • Average unemployment rate in 2019: 2.22%
  • Labor force participation rate: 65.7%
  • People whose income is below the poverty line: 6.2%
  • Long-term liabilities per capita: $5,154
  • Average mortgage debt: $147,236
  • Homes with negative equity: 4.05%

47. New Hampshire

  • Average unemployment rate in 2019: 2.46%
  • Labor force participation rate: 67%
  • People whose income is below the poverty line: 4.7%
  • Long-term liabilities per capita: $2,555
  • Average mortgage debt: $178,409
  • Homes with negative equity: 4%

48. Kansas

  • Average unemployment rate in 2019: 3.35%
  • Labor force participation rate: 66.3%
  • People whose income is below the poverty line: 8%
  • Long-term liabilities per capita: $2,527
  • Average mortgage debt: $137,542
  • Homes with negative equity: 2.1%

49. Colorado

  • Average unemployment rate in 2019: 3.14%
  • Labor force participation rate: 68.7%
  • People whose income is below the poverty line: 6.2%
  • Long-term liabilities per capita: $3,175
  • Average mortgage debt: $258,026
  • Homes with negative equity: 1.7%

50. Utah

  • Average unemployment rate in 2019: 2.85%
  • Labor force participation rate: 68.1%
  • People whose income is below the poverty line: 6.1%
  • Long-term liabilities per capita: $1,555
  • Average mortgage debt: $213,771
  • Homes with negative equity: 1.6%

More From GOBankingRates

Methodology: GOBankingRates determined the states that are least prepared for the next recession by analyzing all 50 states along the following criteria: (1) current average annual unemployment rate, based on Bureau of Labor Statistics data available from January to October 2019; (2) unemployment rate year-over-year change as sourced from Bureau of Labor Statistics data available from October 2018 through October 2019; (3) labor force participation rate, sourced from the 2018 American Community Survey by the U.S. Census Bureau; (4) percentage of all people whose income is below the poverty line, sourced from the 2018 American Community Survey by the U.S. Census Bureau; (5) long-term liabilities debt per capita as sourced from Mercatus Research’s 2018 Ranking the States by Fiscal Condition report; (6) average mortgage debt as sourced from Experian’s second quarter 2019 data; (7) the average percentage of homes with negative equity as sourced form CoreLogic’s Homeowner Equity Insights through the second quarter of 2019 report; and (8) economic diversity, based on the percentage of employment in each city across 13 industries tracked by the Census Bureau compared to the percentage of employment for the U.S. overall; the greater the discrepancy, the more vulnerable the city. All eight factors were then scored and combined with the lowest score being the best. In final calculations, factor No. 2 was weighted 1 1/2 times and Factor (8) was weighted two times. All data was collected and is up to date as of Dec. 6, 2019.

This article originally appeared on GOBankingRates.com: States Least Prepared for the Recession