- The novel coronavirus has caused many businesses to shutter, several cities to be placed on lockdown, and a record-shattering number of Americans to file for unemployment.
- Business Insider looked into which states are most prepared for a possible recession, which seems increasingly likely amid the chaos surrounding the pandemic.
- We used state government data from the US Census to rank the states’ fiscal positions based on their government debt and holdings of liquid assets.
- Alaska, Wyoming, and North Dakota were at the top of our list.
- Visit Business Insider’s homepage for more stories.
It seems a recession is drawing near due to the novel coronavirus and the drastic measures taken to slow the spread of the new disease. Some states might be more prepared to handle the financial burden than others.
Many businesses have had to temporarily close or lay off workers. A record-shattering 3.3 million Americans filed for unemployment benefits in the week ending on March 21 according to a new report by the US Department of Labor. Different industries are already taking a hit as people cancel flights and are told to stay at home.
State governments could begin to feel economic pain soon as well. Personal income tax and sales tax contribute the most to a state’s revenue, and those sources will be affected by a decrease in consumer spending and increase in job layoffs, according to a report from The Pew Charitable Trusts.
Pew suggests states will have to use their “rainy day funds” or request more federal aid to fix budget gaps amidst the coronavirus outbreak.
Pew notes in their analysis of the fiscal position of states that across the nation, there have been "record amounts in both rainy day funds and total balances", which could come in handy during a recession.
To get a sense of which states are most ready for hard economic times, we used state government finance data from the US Census Bureau for the 2018 fiscal year, the most recent available. We ranked the states based on the difference between government holdings of liquid assets (specifically, cash and securities) and total government debt at the end of the fiscal year, adjusted by 2018 estimated state populations.
Alaska, Wyoming, and North Dakota ranked at the top of the list because of their state's large cash and security holdings compared to their debt. According to Pew's analysis, these are the only three states that have "more than 100 days' worth of operating costs."
The following are the 19 states that are in the best fiscal position for a potential recession, along with various state government finance figures.
19. Minnesota
Total cash and security holdings: $59.7 billion
Total debt: $16.6 billion
Total revenue: $56.3 billion
Total expenditure: $49.6 billion
18. Vermont
Total cash and security holdings: $8.7 billion
Total debt: $3.6 billion
Total revenue: $7.0 billion
Total expenditure: $7.1 billion
17. Texas
Total cash and security holdings: $289.9 billion
Total debt: $51.5 billion
Total revenue: $171.8 billion
Total expenditure: $150.9 billion
16. New York
Total cash and security holdings: $311.6 billion
Total debt: $148.0 billion
Total revenue: $223.5 billion
Total expenditure: $213.2 billion
15. Wisconsin
Total cash and security holdings: $71.7 billion
Total debt: $22.8 billion
Total revenue: $54.5 billion
Total expenditure: $42.2 billion
14. Hawaii
Total cash and security holdings: $22.0 billion
Total debt: $9.9 billion
Total revenue: $16.2 billion
Total expenditure: $13.7 billion
13. California
Total cash and security holdings: $493.0 billion
Total debt: $148.0 billion
Total revenue: $412.4 billion
Total expenditure: $375.1 billion
12. Idaho
Total cash and security holdings: $19.7 billion
Total debt: $3.4 billion
Total revenue: $12.0 billion
Total expenditure: $10.4 billion
11. Virginia
Total cash and security holdings: $112.1 billion
Total debt: $29.1 billion
Total revenue: $62.6 billion
Total expenditure: $56.4 billion
10. Ohio
Total cash and security holdings: $150.6 billion
Total debt: $31.6 billion
Total revenue: $101.0 billion
Total expenditure: $89.0 billion
9. Nebraska
Total cash and security holdings: $22.2 billion
Total debt: $2.1 billion
Total revenue: $12.3 billion
Total expenditure: $11.1 billion
8. Maine
Total cash and security holdings: $21.3 billion
Total debt: $4.8 billion
Total revenue: $10.7 billion
Total expenditure: $9.2 billion
7. Oregon
Total cash and security holdings: $76.7 billion
Total debt: $14.3 billion
Total revenue: $43.9 billion
Total expenditure: $39.4 billion
6. South Dakota
Total cash and security holdings: $18.2 billion
Total debt: $3.7 billion
Total revenue: $5.6 billion
Total expenditure: $5.2 billion
5. Montana
Total cash and security holdings: $20.5 billion
Total debt: $2.7 billion
Total revenue: $9.2 billion
Total expenditure: $7.8 billion
4. New Mexico
Total cash and security holdings: $43.0 billion
Total debt: $7.3 billion
Total revenue: $21.0 billion
Total expenditure: $21.5 billion
3. North Dakota
Total cash and security holdings: $36.3 billion
Total debt: $3.0 billion
Total revenue: $8.9 billion
Total expenditure: $7.2 billion
2. Wyoming
Total cash and security holdings: $29.3 billion
Total debt: $832.4 million
Total revenue: $7.5 billion
Total expenditure: $6.2 billion
1. Alaska
Total cash and security holdings: $89.0 billion
Total debt: $5.9 billion
Total revenue: $9.9 billion
Total expenditure: $12.0 billion