State & Local Government Policy, Business and Technology

Is Your State Ready for the Next Recession? Chances Are, It's Not.

Governing: Nearly a decade since the last recession started, most states still aren’t prepared for the next one.

Fewer than half of states have the funds they need to weather the economic downturn, and nearly one-third would likely face significant fiscal stress, according to a report released today by Moody’s Analytics.

The report conducted the first-ever stress test on all 50 state budgets to assess their ability to absorb a fiscal shock. It found that 16 states have enough in reserves to get through the next recession somewhat comfortably. Another 19 states have some or most of the funds they would need, which means they would likely have to raise revenue and/or cut spending, as well as tap reserves, to balance their budgets during a downturn. And 15 states are so “substantially unprepared” for the next downturn, they would face major “economic repercussions.”

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