"The state governments are an exercise in irresponsibility. Through the property boom, they enjoyed the increase in people's assessments," Morici said. "They are just not structured to handle the cynical movements in their revenue the way they should be.
"Just like companies, municipalities can behave irresponsibly in good times, not shore up any money for bad times and then go crying to the federal government when they need cash," he added.
Casey Mulligan, an economics professor at the University of Chicago, said a lot of regions have a few industries. When those industries suffer, the whole area tends to. Take New York City, which is now hurting because of troubles in the financial sector based there.
One bright spot on the economy: consumer goods. Brands like Coca-Cola and General Mills are doing well, Mulligan said, in particular, thanks to strong international growth. The large high-tech companies also appear to be doing well.
"It's true in all recessions and booms," he added, "that there are some places that don't participate."