Economic Contraction Spreads Across 22 U.S. States as GDP by State Analysis Reveals Vulnerability

While the United States hasn’t officially entered a recession on the national level, economic data paints a more complex picture when examining conditions state by state. Nearly a quarter of the country—22 states—are currently grappling with recession conditions or hovering dangerously close to that threshold.

Mark Zandi, chief economist at Moody’s Analytics, highlighted this regional fragmentation, noting that state-level GDP analysis exposes critical vulnerabilities in the broader economic landscape. According to his assessment, states representing roughly one-third of total U.S. GDP are either actively contracting or carrying elevated recession risk, while another third of states are simply treading water with minimal growth momentum.

Why State-Level GDP Data Matters

Examining GDP by state has become increasingly important for understanding national economic health. The recession risk isn’t confined to any single region—it’s distributed across America’s economic geography. Some states are already reporting visible economic contraction, while others have shifted into slower growth modes following previous expansions.

Zandi identified several critical patterns. The Washington D.C. area faces particular pressure due to government employment reductions. Southern states, though generally maintaining stronger positions, are experiencing noticeable slowdown in their growth rates. Two economic powerhouses—California and New York—collectively representing over one-fifth of U.S. GDP, are holding steady for now. However, their continued stability will be crucial in determining whether the national economy avoids a full recession.

The 22 States Most Vulnerable to Economic Contraction

These states face significant economic pressure when ranked by economic resilience:

1. Wyoming
2. Montana
3. Minnesota
4. Mississippi
5. Kansas
6. Massachusetts
7. Washington
8. Georgia
9. New Hampshire
10. Maryland
11. Rhode Island
12. Illinois
13. Delaware
14. Virginia
15. Oregon
16. Connecticut
17. South Dakota
18. New Jersey
19. Maine
20. Iowa
21. West Virginia
22. District of Columbia

These 22 states collectively represent substantial portions of the country’s overall GDP by state. Their economic trajectory will significantly influence whether the U.S. tips into widespread recession territory or manages to sustain modest growth across the broader economy.