Recession Nation: 49 States at Risk

In March, five states were in recession; now there are 30, with 19 more at risk.

October 20, 2008, 6:22 PM

Nov. 3, 2008— -- No state is immune from falling into a recession, except for one: oil-rich Alaska.

What started out as a housing problem in a few states has now exploded into a full-fledged recession, with a majority of states now in or dangerously close to recession.

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At the end of September, 30 states were in recession, according to Moody's Back in March, only five states were in recession: Arizona, California, Florida, Michigan and Nevada.

Even in the last month, the picture has grown more dire. At the end of August, 27 states were in recession and a few were still expanding. But now, Moody's has determined that Hawaii, Minnesota and Utah have fallen into recession.

Colorado, Massachusetts, Montana, New Hampshire and Texas are also no longer classified as expanding economies. They now are at risk of falling into recession.

The just leaves one part of the country -- Alaska -- with a still-expanding economy. (The District of Columbia, with its government and government-related jobs, also still has an expanding economy.)

"There's no way around the map. It says the nation is in recession. The recession is coast to coast," Mark Zandi, chief economist and co-founder of Moody's told ABC News recently. "One of the unique features of this downturn is how broad-based it is, regionally."

What happened between March and today?

"The job market has eroded measurably and industrial production has weakened sharply in the last couple of months. Those are the two key things. The other thing is that retail sales have also sharply weakened," Zandi said.

The one bright side is part of the middle of the country. Agriculture and energy are still strong and providing jobs.

"In the past, in recessions, you saw people moving from areas that were hard hit to areas that were holding up better, looking for jobs and better incomes," he said. "Now, there is nowhere to go." explains that what started in housing has now become a more broad-based slowdown.

"Financial market turmoil is weighing on businesses' ability to finance daily operations, and weak domestic demand and near recession-like conditions globally have brought the industry to its knees," economist Andrew Gledhill wrote on the firm's Web site. "Michigan has been in recession the longest, although its malaise was chiefly its own at that point. The national recession began last December or January in California, Arizona, Nevada, Florida and others. States across the industrial Midwest were the next to drop, and it spread from there."

There is also plenty of bad news for most of the nation's cities. looks at 381 metro areas. Of those, 276 are in a recession, the largest being Los Angeles, Chicago and Atlanta. In September, Minneapolis; Portland, Ore., and Camden, N.J. also joined that list.

Now, there is also risk of cities such as Houston, Dallas and Seattle falling into recession.

High Unemployment

David Wyss, managing director and chief economist at Standard & Poor's, said the worst problems are in the old rust belt, Michigan being the worst hit. The state now has the highest unemployment in the country.

"The recession began, really, with the housing sector and then also very quickly with automobiles," Wyss recently told ABC News. "The states that have been hardest hit have been the manufacturing states, in large part because of what happened with cars."

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Now the recession is spreading to other states where the housing bubble never burst. For instance, Wyss said, the Boeing strike was a drag to Washington state's economy and spread over into Oregon.

"The exception is the part of the country between the Mississippi River and the Rockies, which is still doing pretty well," he said. "High farm prices are good if you are in Iowa. High oil prices are good if you are in Houston."

Peter Morici, an economics professor at the University of Maryland, said a decline in manufacturing is really hurting the Rust Belt. That said, the economy still is very regional and industry-specific.

"It always varies. Even during the Great Depression, there were people that hardly felt it," Morici said. "Recessions and depressions always have varying effects on people and locations."

Agriculture is doing well because of ethanol development and a growing demand for grains by people in Asia.

Budget Shortfalls

Several state governments already face major budget shortfalls.

"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 is 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."