MerchantMaverick.com, the business product comparison site for small business owners, determined that the top three states on the list are Nebraska, North Dakota, and Minnesota. No Upper Midwest state ranked lower than Michigan, at number 17.  While these states are different in many ways, they all share low unemployment, and governments with prudent tax and spending habits. Many even experienced positive GDP growth during the Great Recession, while other states had stagnant or shrinking GDP.

Key Findings

  • There is no one formula for a state’s success. For example, among the top three states, Nebraska has the second-best debt-to-income ratio in the country. But North Dakota and Minnesota have ratios right around the average. Conversely, Nebraska offers unemployment insurance coverage to around 30 percent of its unemployed, placing it in the lower half of the country, but Minnesota unemployment insurance coverage to more than 50 percent – the second highest.
  • High per capita GDP isn’t enough. New York, Washington, and California have some of the highest GDPs per capita, and yet, household debt and high unemployment ranked them in the middle of the country in this study.
  • The Sunbelt states seem particularly vulnerable to a recession. Six of the ten worst states to survive a recession hail from that region.

THE TOP 10 STATES TO SURVIVE THE NEXT RECESSION:

#1.  Nebraska
#2.  North Dakota
#3.  Minnesota
#4.  Delaware
#5.  West Virginia
#6.  Oklahoma
#7.  New Jersey
#8.  Texas
#9.  Wisconsin
#10. Illinois

Methodology
To determine the best and worst states to survive the next recession, researchers gathered data from eight separate metrics across all 50 US states. For each metric, states were given a score out of 100 based on each state’s rank, with the best-ranked state scoring 100 and the worst-ranked state scoring 0. These individual metric scores were then multiplied by specific weights to achieve an overall score for each state.

Below are the eight metrics the site chose, along with the percentage used to calculate the weight of each metric:

  • Size of state government reserves (17.5%)
  • State GDP per capita (17.5%)
  • Debt-to-income ratio (17.5%)
  • Unemployment insurance coverage (17.5%)
  • Unemployment rate (10%)
  • Housing affordability (10%)
  • State income tax rates (6%) 
  • Total state GDP change from 2007 to 2010 (4%)

“We’ve all heard about ‘traditional Midwestern values’ of thrift, hard work, and patience,” says Mary Brown, Special Projects Director, MerchantMaverick.com. “It seems that these are state government values, too, and they’re going to help people when the next recession hits.”