Cold, upper Midwest states are the most capable of withstanding a potential recession later this year, according to a new report by NationalBusinessCapital.com, a fintech lending platform for businesses.

Its inaugural report, Best States to Recover From a Recession in 2023, evaluated cost of living, job opportunities, budgeting and effective safety nets to evaluate the states most likely to weather a recession.

North Dakota, Minnesota, Wisconsin and South Dakota came out as the front runners in their ability to weather economic lows.

“We were surprised when research showed the Upper Midwest was so well-positioned to weather a recession,” says Joe Camberato, CEO, NationalBusinessCapital.com. “But it makes sense; the balance of frugal management and forward-looking economics policy make these states attractive for businesses and residents in tough times.”

According to the report, the Midwestern states not only survived but thrived in the face of adversity.

“While the Great Recession of 2008 dealt a devastating blow to economies across the nation, these Upper Midwest states recovered with newfound strength and resilience”, the report added.

States with migration boons didn’t fare well.

Those with low taxes and affordable housing, like Florida (39th), Tennessee (46th) and North Carolina (48th), saw housing prices rise due to increased demand from new residents relocating from states with higher taxes and salaries.

Despite recent population declines, states like Massachusetts (7th) and West Virginia (10th) made the top 10, but the report found that states with accelerated outward-migration, including New York (17th), California (34th) and Illinois (23rd), displayed a mediocre performance.

Though Wyoming (4th) struggled during the Great Recession, it has shown a turnaround since, investing heavily in its economy. With substantial reserves, the report noted that Wyoming can sustain itself for almost a year using rainy-day funds.

Unemployment rates were generally low across the board, the report added.

Nevada (43rd) had the highest unemployment rate at 5.4 percent, while Nebraska (3rd) and New Hampshire (25th) had the lowest rates at 1.9 percent. Most states had unemployment rates below 4 percent.

Recession-resistant states include both red states with lean budgeting and low living costs, as well as blue states with comprehensive social spending.

TOP 10 MOST RECESSION-PROOF STATES IN 2023:

#1. North Dakota

#2. Alaska

#3. Nebraska

#4. Wyoming

#5 (tie) Minnesota

#5 (tie) Wisconsin

#7. Massachusetts

#8. South Dakota

#9. Indiana

#10. West Virginia

Eight key metrics were used to gauge each state’s recession performance. Researchers assigned ranks of 0 to the lowest scoring state and 100 to the highest, then multiplied each metric by a designated weight and combined them to derive an overall score.

The selected metrics and their respective weights are below:

• State Reserve Balances (17%)
• State GDP per capita (17%)
• Debt-to-income ratio (17%)
• Unemployment insurance coverage (17%)
• Unemployment rate (10%)
• Housing affordability (10%)
• Effective tax rates (6%)
• Great Recession GDP change (3%)