Although the stock market continues to reach all-time highs, not everyone is doing well in the U.S.
Moody's Analytics Chief Economist Mark Zandi combed through state-level data and sounded the alarm about economic hardships. He said that nearly a third of states are on the brink of a recession, and another third is barely hanging on. Meanwhile, he said the remaining states are growing.
Zandi put Washington, D.C, in the spotlight due to the significant government job cuts due to the Department of Government Efficiency. He said California and New York are holding their own, which is critical since they make up more than 20% of the country's GDP.
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Southern States Are The Winners
One of the themes was southern states ranking well, and Zandi acknowledged this fact in his X post.
"Southern states are generally the strongest, but their growth is slowing," he said.
Not all of the expanding states were from the South, but they stole the show. The 16 states that have been expanding are South Carolina, Idaho, Texas, Oklahoma, North Carolina, Alabama, Kentucky, Florida, Nebraska, Indiana, Louisiana, North Dakota, Arizona, Pennsylvania, Utah, and Wisconsin.
Texas and Florida are the most important ones on the list based on their share of the GDP, measured as a percentage. Texas makes up 9.41% of the GDP, while Florida contributes 5.78%.
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The Northeast And Most Of The Midwest Aren't Looking Good
Although most southern states are growing, the same can't be said about the northeast and most of the Midwest. Most of the states on the list contribute less than 1% to the GDP, but there are some states in this category that contribute roughly 3% individually.
According to Zandi, the 22 states that are in a recession or at a high risk are Wyoming, Montana, Minnesota, Mississippi, Kansas, Massachusetts, Washington, Georgia, New Hampshire, Maryland, Rhode Island, Illinois, Delaware, Virginia, Oregon, Connecticut, South Dakota, New Jersey, Maine, Iowa, West Virginia, and Washington, D.C.
Illinois, Georgia, and Washington are the standouts on this list. They make up 3.85%, 3.03%, and 3.02% of GDP, respectively.
The 13 states that are barely hanging on include Missouri, Ohio, Hawaii, New Mexico, Alaska, New York, Vermont, Arkansas, California, Tennessee, Nevada, Colorado, and Michigan.
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Red States Vs. Blue States
Breaking it down by red states vs. blue states reveals a common trend, especially with the outliers.
Most southern states are red states, and it turns out all 16 expanding states are red states, with Arizona, Pennsylvania, and Wisconsin flipping to red states in the 2024 presidential election.
Meanwhile, only eight of the 22 states in recessions are red states. This list includes Washington, D.C. This part of the list featured 13 blue states and the nation's capital.
The 13 states that are treading water offer a more balanced perspective. Seven of these 13 states are red states, and two of them – Nevada and Michigan – flipped to red states during the election.
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