Stress-Testing U.S. States

Better determine the amount of reserves needed to avoid extraordinary fiscal measures during economic downturns.

It has been almost a decade since the Great Recession, and many are rightfully beginning to look ahead to the next economic downturn. Recessions and their place in the business cycle are an accepted fact of life in any organization, especially government. To help state governments better prepare themselves for the next recession, Moody’s Analytics has taken to performing annual stress tests on their budgets.

This paper estimates the amount of fiscal stress likely to be applied to state budgets under different recession scenarios and comparing that stress to the amount of money states have set aside in reserve. 

Download Stress-Testing U.S. States: 2018