Most U.S. states aren’t prepared for the next recession

Just 16 states have adequate backup money on hand, according to a new Moody’s Analytics analysis; where’s Arizona rank?

By Sharon Nunn | The Wall Street Journal

If the next recession hit the U.S. this year, more than a quarter of states would be financially unprepared to weather even a moderate downturn, according to a new report.

Fifteen states would struggle in the case of a recession-related tax revenue slump and spike in demand for services, such as Medicaid. They are more than 5 percentage points below the share of funds left in their budgets they would need to tap, according to a new Moody’s Analytics analysis. Another 19 states narrowly fall short.

Just 16 states have adequate backup money on hand, with Alaska having almost three times as much as the state would need to keep its economy buoyant. In contrast, Louisiana is missing almost a quarter of the money it would likely need if recession-related financial strains hit the state.

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