Only a few states are at serious risk of recession
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There are growing worries about a global recession or a U.S. recession, but individual states are also at risk. While states generally move in concert with the country, not every state started and ended its last recession in line with the broader U.S. recession of 2007–2009.
Case in point: There have been 5 states where recessions have occurred between that recession and now. The most recent is Alaska, which was in recession from Q2 2016–Q2 2017, Lending Tree chief economist Tendayi Kapfidze notes in a recent post.
What he's saying: Kapfidze created a model to evaluate each state's current recession risk, specifically the likelihood that a state will have weak economic fundamentals as determined by the growth rate of that its coincident index.
- "State coincident indexes — created by the Federal Reserve Bank of Philadelphia — gauge how well a state economy is doing," Kapfidze explains.
- "If a state has a negative year-over-year growth rate in its coincident index, it’s likely that that state has weak economic fundamentals. If a state has a negative year-over-year growth rate in its coincident index for two or more consecutive quarters, then we’ve considered it to likely be in recession."
Threat level: Michigan, Hawaii and Montana all show a high risk for recession.
- Nebraska, Oregon and Idaho have the lowest risk of recession, with all 3 states showing a 0% chance of having weak fundamentals in Q4.
The big picture: Overall, most states appear to be in good shape, Kapfidze says.
- "Our model predicts that by Q4 of 2019, the probability of weak economic fundamentals in 42 states will be below 5%."
- "Based on the conclusions of our model, it seems that — barring any drastic changes — most states aren’t in immediate risk of recession."
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