Fifty-eight percent of Americans live in one of the 25 states most vulnerable to a recession, according to a new report from National Business Capital, a platform for business owners.

With just a few exceptions, residents in more populous states are bearing the brunt of high inflation and, over the past year, rising unemployment, putting millions of people in a tough spot if the economy turns sour.

The majority of the weakest states are in the South and Mountain regions, which experienced housing and migration booms in recent years that drove up prices and strained household budgets — and hurt longtime residents with lower incomes.

In contrast, northern Great Plains states showed resilience, and in the Northeast, New York and Delaware dramatically improved as they emerged from the pandemic slump.

The report indicates that the unemployment rate nationally increased by an average of 0.3 points between February 2024 and February 2025, with just 10 states experiencing a decrease during that period.

Between 2022 and 2024, the household debt-to-income ratio increased from an average of 0.80 to 0.84, leaving American households more vulnerable to spiraling debt in the event they should lose their incomes.

To create their rankings, National Business Capital researchers selected the following metrics to produce an overall score (out of 100) for each state:

  • Government reserve balances: Percentage of a state government’s monetary reserves relative to its government spending
  • State GDP per capita: Strength of a state’s economic output relative to its population size
  • Debt-to-income ratio: Households with less debt relative to income tend to be more resilient when facing loss of income
  • Unemployment insurance coverage: Percentage of unemployed people covered by a state’s unemployment insurance programs in the 2024 fourth quarter — a measure of the current effectiveness of the state’s safety net
  • Unemployment rate: Preliminary unemployment data for February 2025 as a gauge of the current health of each state’s economy
  • Change in unemployment rate: Change in each state between February 2024 and February 2025 as a gauge of whether its economic condition is improving or worsening
  • Housing affordability: Percentage of households that currently cannot afford a new home built within a state, a measure of the state’s cost of living relative to its income.
  • Effective tax burden: Aggregate weight of each state’s personal income, sales, property, and sales and excise taxes as a percentage of total personal income 
  • Recent recession performance: GDP changes in each state in the aftermath of the Great Recession and pandemic recession 

See the accompanying gallery for the 10 states that are more vulnerable in the event of an economic downturn.

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