There have been talks in news reports for months now about whether the U.S. is headed for another recession.
While economic forecasts look pretty strong heading into 2020, it’s impossible for sustained economic growth to continue forever. According to the National Bureau of Economic Research data on American economic history, periods of economic growth tend to last around three-and-a-half years on average in the U.S. Considering our current growth period began in 2009, we were due for a recession around 2012. That means we’re close to eight years overdue.
Just the thought of another economic downturn sends panic into the hearts of those who lived and worked through the Great Recession. It’s true, the next recession is likely to be milder than that one.
Still, it’s never a bad idea to be prepared for the worst. That means looking at places you can live that might help shield you from the effects of the next recession, whenever it may come.
We looked at data around states’ unemployment rates, as well as their budgets and surpluses (more on that methodology below). With that data, we created a list of the 20 states that are best prepared for the next recession — and places you may want to look at if you’re planning a move and want to be as recession-proof as possible.
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These are the states that have the lowest rates of unemployment variance coupled with the highest budget surpluses, making them places that would likely be able to ride out the next economic downturn without any major struggle.
Unemployment variance rank: #2
Budget surplus rank: #2
Alaska has one of the lowest rates of unemployment variance in the entire nation, meaning people who live in the Last Frontier tend to stay in their jobs for the long term, lending stability to the local economy. Alaska also has a healthy state budget surplus that it could dip into in the event that the economy took a turn. Meaning it’s well prepared to ride out the next recession with few major problems.
Need more incentive to consider Alaska for your future, recession-proof home? The state collects oil royalties and pays out yearly dividends to all of its residents. In 2018, that came out to $1,600 per person living in Alaska. Not a bad perk, especially during a recession when money might be a little tight.
Unemployment variance rank: #6
Budget surplus rank: #1
Wyoming has the best state budget surplus in the nation, which means the state is well prepared for any future shortfalls or economic hardship. It also ranks among the top states for unemployment variance, meaning people who live in Wyoming have little trouble finding and keeping jobs. Those are both great signs of a stable state economy, making Wyoming one place you might consider riding out the next recession.
#3: West Virginia
Unemployment variance rank: #14
Budget surplus rank: #3
While West Virginia’s unemployment rate does vary more than some of the other top recession-proof states, its top three spot for its state budget surplus makes it a destination that’s ready for economic hardship. During the next downturn, the state government will have savings to spare to cover the reduction in tax revenue that’s likely to come with a lagging economy.
Unemployment variance rank: #21
Budget surplus rank: #5
Looking for sun, sand, and tropical weather year-round? Despite its high cost of living, Hawaii is one of the best places you can ride out the next recession. While the state’s unemployment rate varies enough to land it pretty much in the middle of the pack, Hawaii is in the top 5 states for a healthy budget surplus. This will help residents continue to enjoy state benefits even during a downturn.
Unemployment variance rank: #40
Budget surplus rank: #4
If you’re into outdoor recreation, there’s no place like Oregon to make your new home. It’s just an added bonus that the state might help shield you from the effects of the next recession, too. While Oregon’s unemployment variance rate is on the high side, the state ranks fourth in the nation for its budget surplus, which earned it a spot in the top five places to move if you’re looking for a recession-proof future home.
Unemployment variance rank: #16
Budget surplus rank: #8
There’s a reason so many people are moving to Texas, but who knew the state is one of the most recession-proof in the country? With a decently low rate of unemployment variance and one of the top budget surpluses in the country, the Lone Star State is a great place to check out if you’re looking for a place to move to prepare for the next economic downturn.
Unemployment variance rank: #26
Budget surplus rank: #6
There are already some great economic benefits to living in Delaware. The state has one of the lowest income tax rates in the country, and social security benefits are tax-exempt, making it an even better choice if you’re nearing retirement age. But with a pretty decently low rate of unemployment variance and a great state budget surplus, Delaware is also one of the best-prepared states for the next recession.
Unemployment variance rank: #28
Budget surplus rank: #7
With tons of outdoor space, a temperate climate year-round, and modern city amenities in Seattle where the tech scene is booming, Washington State has plenty to offer. It’s also one of the top states where you can protect yourself from the effects of a recession, with a great budget surplus and a pretty low rate of unemployment variance.
Unemployment variance rank: #3
Budget surplus rank: #9
You might never have considered the Cornhusker state as a potential future home, but if you want to avoid the effects of the next recession, it’s worth looking into. Nebraska has one of the lowest rates of unemployment variance in the entire nation, which means once people find work, they don’t typically lose it. Plus, the state puts away a healthy budget surplus from its yearly tax revenue.
#10: South Dakota
Unemployment variance rank: #4
Budget surplus rank: #11
South Dakota’s tax revenue is more than its yearly state budget, which means the state has plenty of money socked away to help it get through the lean years that might accompany the next recession. And unemployment variance is extremely low in the Mount Rushmore state. If you’re looking for a recession-proof future home, this state is definitely one to consider.
#11: New Mexico
Unemployment variance rank: #12
Budget surplus rank: #14
New Mexico has a lower cost of living than the national average, which alone would make it a great place to live in the event of another recession. But its low rate of unemployment variance and its yearly budget surplus make it an even more attractive option if you’re looking for a recession-proof future home.
Unemployment variance rank: #34
Budget surplus rank: #12
Idaho is far more than just potatoes. The state has plenty of stunning natural scenery, healthy population growth in the metropolitan area surrounding its state capitol, Boise, and it ranks pretty high on the country’s list of recession-proof states.
While Idaho’s unemployment variance rate is pretty high at #34 out of the 50 states, it almost makes the top 10 for its state budget surplus, which means Idaho is still a good choice for a recession-proof future home.
#13: North Carolina
Unemployment variance rank: #43
Budget surplus rank: #10
With its southern charm, low cost of living, and high quality of life, North Carolina is on many people’s lists of states to check out. But what makes the Tar Heel State an even better choice is the fact that it would probably do OK riding out the next recession.
While the state’s unemployment variance is high, North Carolina still makes the top 10 states in the nation for its budget surplus, which is a strong indicator that it could make it through lean times relatively unscathed.
#14: New York
Unemployment variance rank: #23
Budget surplus rank: #16
While New York’s high cost of living is a turnoff for many potential new residents, it might help soften the blow to know the state could likely take the next recession in stride. While unemployment variance in New York is pretty middle-of-the-road, the state maintains a surplus in its yearly budget, which gives it some cushioning in the event of another economic downturn.
Unemployment variance rank: #7
Budget surplus rank: #22
Iowa is a state full of cities and towns that offer an affordable cost of living, good healthcare, great schools, and more benefits that add up to an awesome quality of life. So it’s even better that Iowa is one of the top recession-proof states in the country!
Here you’ll find a stable job market with a low rate of unemployment variance. Iowa doesn’t actually have a yearly budget surplus, but its deficit is very low compared to many other states, making this a great choice if you’re looking for a recession-proof state to call home.
Unemployment variance rank: #42
Budget surplus rank: #13
The Hoosier State has a lot of unemployment variance, but it makes up for it with its healthy surplus in the state budget — Indiana takes in more tax revenue each year than it spends, which means there’s likely to be plenty of money saved up in the state’s coffers to ride out a mild recession without any major impact to residents.
Unemployment variance rank: #15
Budget surplus rank: #20
Looking for a high quality of life, low cost of living, plenty of beautiful scenery, and a state that will provide you with a pretty recession-proof life? Minnesota may be it. The state’s rate of unemployment variance is on the lower end of the rankings for the country. And while Minnesota doesn’t put away a budget surplus each year, its state budget deficit is one of the lowest in the country.
Unemployment variance rank: #39
Budget surplus rank: #21
If great food, beer, coffee, and music appeal to you in your search for a recession-proof state to call your future home, Tennessee is definitely worth taking a look at. It’s not as recession-proof as the others on this list, as the Volunteer State has pretty high unemployment variance and has a state budget deficit (albeit a small one) each year. Still, Tennessee has a stable enough local economy to allow you to make it through a recession without as many ill effects as most of the country.
Unemployment variance rank: #44
Budget surplus rank: #17
Georgia is home to tons of history, sophisticated metropolitan areas, stunning outdoor spaces, and more that make it a great state to consider moving to. But the fact that Georgia has a yearly budget surplus that would allow it to counter the effects of a recession just sweetens the deal. Sure, unemployment variance here is high. But if your job is stable, that won’t be likely to affect you, and Georgia could be just the recession-proof state you’ve been looking for to call home.
Unemployment variance rank: #41
Budget surplus rank: #18
Alabama won’t perfectly shield you from a recession, considering how high its unemployment variance rate is. But the state puts away more in tax revenue each year than it spends, and that counts for something. While Alabama isn’t perfectly recession-proof, it’s a better place to ride the waves of an unsteady economy than most of the country.
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So your state didn’t make the top 20, but you still want to know how you’d fare in the next recession living there? Here’s how the other 30 states ranked.
#23: South Carolina
#31: New Hampshire
#36: Rhode Island
#47: New Jersey
#48: North Dakota
To determine which states were the most recession-proof in the nation, we looked at a combination of two different factors:
How much the state unemployment rate varied from month to month between January of 2000 and September of 2019, and
Whether the state had a budget surplus or a deficit, and how well its financial reserves would be able to weather a recession.
Unemployment data was gathered from the Bureau of Labor Statistics. This measure relates more to how individuals might fare in a recession.
State budget data was collected from a report that studied how prepared each state is to undergo economic stress. This measure relates more to the entire state’s overall preparedness for economic uncertainty and instability.
We combined these two measures because the average citizen would be affected both by changes in employment and job availability, and also by how well their state is prepared to handle financial difficulties that would be likely to come with a recession. Financial strength will affect unemployment, and that’s why unemployment data was given less weight in our final calculations. Here’s how the factors were weighted:
- Unemployment variance: 0.2
- Surplus: 0.8
Whether you’re already planning a move, or this article made you wonder if you should look into relocating to a recession-proof state, you can start your moving process by getting instant price quotes from multiple movers you can trust with us.