Sep 13, 2019

Only a few states are at serious risk of recession

Data: LendingTree; Chart: Naema Ahmed/Axios

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."

Go deeper: Millennials aren't ready for recession

Go deeper

Economists forecast slowing U.S. growth from U.S.-China trade war

Shipping containers from China in Long Beach, California. Photo: Mark Ralston/AFP/Getty Images

Economists said in a new survey that they think the U.S.-China trade war will bring about a slowdown in U.S. growth this year and next, per AP.

Why it matters: The economists also said they expect the trade war to increase the risk of recession in late 2020, which would put an end to the longest period of economic expansion on record in the U.S.

Go deeperArrowOct 7, 2019

Economists see sustained low growth, but no recession

Illustration: Aïda Amer/Axios

The Organisation for Economic Co-operation and Development (OECD) became the latest international economic organization to cut its global growth forecast, announcing Thursday that it's dropping expected growth to 2.9% this year, the slowest since the financial crisis.

Why it matters: The designation follows similar moves from the International Monetary Fund, World Bank and a slew of central banks and ratings agencies that slashed their estimations for the world's economic growth this year as data continues to worsen.

Go deeperArrowSep 20, 2019

Americans are saving at an unusually high level after Trump's tax cuts

People shopping. Photo: Spencer Platt/Getty Images

Americans have been socking away an unusually high rate of their income since the Great Recession, which economists warn could become harmful to the economy over an extended period of time, according to the Wall Street Journal.

Why it matters: Economists think that if the saving rate surpasses investments for several years, it could hinder economic growth and make it difficult for the Federal Reserve to cut interest rates to boost growth during the next downturn.

Go deeperArrowSep 22, 2019