The National Bureau of Economic Research (NBER) defines a recession as a "significant decline in economic activity that is spread across the economy and that lasts more than a few months."
In practice, a recession is generally defined as at least two consecutive quarters of a decrease in gross domestic product. (1)
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Right now, the U.S. is not quite in a recession. But in a recent MarketWatch report, Mark Zandi, chief economist at Moody’s Analytics, said 22 of America’s 50 states — including the District of Columbia — are already in a recession, and if certain states start experiencing their own declines in growth, it could tip the entire country into a broad economic slump. (2)
And while that sounds ominous, the good news is there are steps you can take to gear up for a potential economic decline.
The 22 states in recession
The states that Zandi believes are in recession are as follows: Connecticut, Delaware, Georgia, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, Oregon, Rhode Island, South Dakota, Virginia, Washington, Washington, D.C., West Virginia, and Wyoming.
One thing some of these states have in common is that they have farm economies that are doing poorly, or manufacturing industries that have slowed down. In general, according to Zandi, any state that has an economy that centers on goods-producing activities, agriculture, light manufacturing or mining is not doing well at the moment.
Zandi also said California and New York are two states that are “treading water” — meaning they’re not currently in a recession but they’re also not experiencing economic growth. If either of these two state economies takes a turn for the worse, it could flip the entire U.S. economy into a recession, according to Zandi.
While Zandi did emphasize that the U.S. is not in a recession just yet, he told MarketWatch that "we’re on the precipice,” blaming much of the problem on President Trump’s tariffs and federal job cuts.
However, the economist also said the criteria he’s using to determine which states are in a recession is slightly different from what the NBER uses, since the same national economic data isn’t available at the state level. Zandi reportedly tried to replicate the NBER’s data, but notes that his conclusions are also based on his judgment.
For this reason, it’s important to take his assessments with a grain of salt. But since he is an economic expert, Zandi’s concerns shouldn’t be quickly dismissed.
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How to prepare for a recession
While there’s no need to panic just yet, it’s also a good idea to get yourself prepared in case the country does fall into a recession.
Given that many states are experiencing an economic slow down, it may only be a matter of time until other states start to feel the pain as well. And if consumer spending declines on a whole, the entire country could find itself in an economic downturn within the coming months.
That’s why it’s important to prepare yourself financially. Here are a few things to focus on as you get started.
Emergency fund
As a general rule of thumb, it’s a good idea to have at least three months’s worth of expenses in an emergency fund, though most experts recommend three to six months’s worth of expenses.
That way, if you’re faced with an emergency expense — or if you happen to lose your job — you’d have the means to pay the bills without dipping into your savings or going into debt. In January, 2025, a U.S. News & World Report article revealed that 42% of Americans don’t have an emergency fund. (3)
If you’re in that boat, you can get one started by setting up a budget so you can carefully track your spending and free up some money. Then, you can set up a high-yield savings account to stash your emergency funds — this will allow you to earn interest as you continue to build up your emergency savings.
Pay off debt
Your next step in preparing for a recession should be paying off any high-interest debt you might have. If you happen to lose your job during an economic downturn, the less money you owe to credit card companies or car payments, the better.
Furthermore, paying off debt could boost your credit score, making it easier to borrow money in the event that you get laid off and need a loan to tide yourself over until you’re working again. According to Experian, the average U.S. credit score is 715. (4)
If yours is considerably lower, you might want to make an effort to pay your bills on time and reduce credit card balances as much as you can. A higher credit score could give you more options during a recession, even if you don’t end up trying to borrow money.
For example, if you decide to move during an economic downturn, a landlord is more likely to approve your rental application if you have a strong credit score.
Boost your income
Another thing you can do is try to pick up some extra work and potentially establish a side hustle. According to Hostinger, 36% of Americans have a side job, and the average side hustler brings in an average of $530 in extra cash every month. (5)
If you can pick up a side job to earn some extra money, you can increase your cash flow to make building your emergency savings a little easier. A side hustle can also come in handy if you happen to lose your job during a recession — you may be able to increase your hours at that gig for more income as you look for another full-time job.
The more steps you take to prepare for a recession, the more options you might have if the economy takes a turn for the worse.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Congress.gov (1); MarketWatch (2); U.S. News & World Report (3); Experian (4); Hostinger (5)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.