According to Moody’s Analytics chief economist Mark Zandi, Nearly one-third of U.S. GDP comes from states that are either already in a recession or at high risk of entering one. These are not all clustered in one region — they stretch from the industrial Midwest to New England to the South. Another third of states are more or less treading water, showing little growth. The remaining states are still expanding, but their momentum is fading. The U.S. economy is quite large and continues to grow—its real GDP rose by about 3.8% in the second quarter of 2025.
Key Takeaways
- A significant number of US states, about 23 are in recession.
- Big states are treading water. Economies like California and New York aren’t collapsing, but they’re not growing much either.
- Job growth is weakening. Across the U.S., hiring is slowing, and revised data suggest the labor market is in worse shape.
23 US States in Recession
To understand which states are weak, strong, or in limbo, Zandi looked at a wide range of indicators — not just unemployment, but industrial production, retail activity, building permits, and more. This multi-data approach is in line with how the National Bureau of Economic Research (NBER) defines a recession: a broad, persistent drop in economic activity.
The table below shows which U.S. states are in recession, which are treading water, and which are expanding.
| State | Business Cycle Status | Share of U.S. GDP (%) |
|---|---|---|
| Georgia | Recession/At-Risk | 3.03 |
| Montana | Recession/At-Risk | 0.25 |
| Wyoming | Recession/At-Risk | 0.18 |
| Michigan | Recession/At-Risk | 2.44 |
| Massachusetts | Recession/At-Risk | 2.73 |
| Mississippi | Recession/At-Risk | 0.53 |
| Minnesota | Recession/At-Risk | 1.7 |
| Kansas | Recession/At-Risk | 0.8 |
| Rhode Island | Recession/At-Risk | 0.28 |
| Delaware | Recession/At-Risk | 0.3 |
| Washington | Recession/At-Risk | 3.02 |
| Illinois | Recession/At-Risk | 3.85 |
| West Virginia | Recession/At-Risk | 0.36 |
| New Hampshire | Recession/At-Risk | 0.42 |
| Maryland | Recession/At-Risk | 1.86 |
| Virginia | Recession/At-Risk | 2.66 |
| South Dakota | Recession/At-Risk | 0.25 |
| Connecticut | Recession/At-Risk | 1.27 |
| Oregon | Recession/At-Risk | 1.14 |
| Iowa | Recession/At-Risk | 0.86 |
| New Jersey | Recession/At-Risk | 2.93 |
| Maine | Recession/At-Risk | 0.64 |
| District of Columbia | Recession/At-Risk | 0.49 |
| South Carolina | Expansion | 1.18 |
| Texas | Expansion | 9.41 |
| Oklahoma | Expansion | 0.92 |
| Idaho | Expansion | 0.43 |
| Kentucky | Expansion | 0.99 |
| Alabama | Expansion | 1.1 |
| Indiana | Expansion | 1.81 |
| Nebraska | Expansion | 0.63 |
| North Carolina | Expansion | 2.86 |
| Louisiana | Expansion | 1.11 |
| Florida | Expansion | 5.78 |
| North Dakota | Expansion | 0.26 |
| Pennsylvania | Expansion | 3.54 |
| Arizona | Expansion | 1.88 |
| Wisconsin | Expansion | 1.53 |
| Utah | Expansion | 1.02 |
| Missouri | Treading Water | 1.54 |
| Ohio | Treading Water | 3.14 |
| Hawaii | Treading Water | 0.39 |
| Arkansas | Treading Water | 0.65 |
| New Mexico | Treading Water | 0.49 |
| Tennessee | Treading Water | 1.87 |
| New York | Treading Water | 7.92 |
| Vermont | Treading Water | 0.16 |
| Alaska | Treading Water | 0.24 |
| Colorado | Treading Water | 1.92 |
| California | Treading Water | 14.5 |
| Nevada | Treading Water | 0.86 |
States in Recession or High Risk
Many of the states flagged as weak or vulnerable span very different parts of the country, but they share signs of deteriorating economic health.
In the Northeast, states like Massachusetts, Rhode Island, and Connecticut are on shaky ground. These states are traditionally service-based, and some are feeling demographic pressures. Their economies rely heavily on higher education and government, and when those sectors falter, the ripple effects are strong. These states often struggle to generate broad-based activity, especially when manufacturing and trade aren’t carrying them.
Over in the Mid-Atlantic, New Jersey and Virginia are also at risk. These economies are relatively large, but job cuts in professional services, government, and trade have taken a toll. For instance, Virginia’s proximity to Washington, D.C., means federal job cuts have a more direct local effect. Meanwhile, New Jersey’s economy has exposure to both finance and manufacturing, making it vulnerable when growth slows or global headwinds intensify.
In the Midwest and South, Illinois, Michigan, Georgia, Kansas, Minnesota, and Mississippi are on the watch list. Some of these are industrial states — like Michigan, where auto manufacturing still matters — and they are being hit by supply chain issues, trade uncertainty, and weak global demand. Georgia and Mississippi face different but overlapping risks: trade exposure, demographic constraints, and a reliance on sectors sensitive to both consumer spending and government policy.
On the West Coast, Washington is also in the red zone. While it’s home to tech giants, its economy is not immune to broader macro stress, and job cuts in certain sectors are weighing on its performance.
States Still Expanding
On the brighter side, there are states that are still growing, though with some caveats.
Texas, Florida, and North Carolina are among the strongest. Texas, in particular, remains a powerhouse with its booming energy sector, strong migration inflows, and solid job creation. Florida benefits from tourism, real estate, and population growth. North Carolina, with its mix of finance, tech, and manufacturing, continues to expand, though growth is slowing compared to its earlier boom years.
States like South Carolina, Oklahoma, Idaho, Kentucky, Alabama, Indiana, Nebraska, Louisiana, North Dakota, Pennsylvania, Arizona, Wisconsin, and Utah round out the group of expanding states. Many of these are supported by a mix of services, moderate manufacturing, and in some cases, energy or agriculture. Their expansion is not immune to macro risk, but for now they are holding up better than their peers in trouble.
States Treading Water
Then there are states labeled as “treading water”: not shrinking sharply, but not accelerating either.
This group includes California, New York, Ohio, Missouri, Hawaii, Alaska, Vermont, Arkansas, New Mexico, Tennessee, Nevada, and Colorado. Big names like California and New York are particularly important: together they account for more than 20% of U.S. GDP, so their economic direction matters to the whole country.
According to Zandi, these states face a tricky balancing act. Growth is weak, but they haven’t yet tipped into a broad contraction.
The U.S. Jobs and Unemployment
The job market is one of the clearest signs that the economy is struggling to gain traction. According to recent reports, job growth has slowed sharply. The U.S. economy added about 119,000 jobs in September. The unemployment rate rose to 4.4%, the highest level in about four years.
Further, sectoral hiring is uneven. According to RBC Economics, most of the new jobs are coming from healthcare, while trade-exposed sectors like manufacturing and professional/business services are shedding jobs. Meanwhile, an analysis from KPMG shows that government hiring is declining (especially at the federal level), and their economic forecasts point to a gradual rise in unemployment later in the year.
Conclusion
Putting it all together, this is a complicated moment in the U.S. economy. While not all states are in crisis, a significant portion — roughly one-third by GDP — is either in recession or dangerously close. At the same time, another third of the country is barely growing, and only a minority of states still look like they have solid momentum.
The labor market, once a bright spot, is now showing real signs of cooling, especially when you account for revised data that paint a weaker picture than previously believed.
Huge states like California and New York — which together make up a big chunk of national output — are not collapsing, but their slow growth is a big risk. If they don’t regain strength, they could pull the rest of the country down.
