Tennessee, Georgia and Alabama rank among 10 most recession-proof states

These are the best states to survive a recession in 2020. / Source: FitSmallBusiness.com

A new study suggests that Tennessee, Georgia and Alabama are all among the top 10 states best positioned for a possible recession as more businesses and economists talk about the end of the longest economic growth period in modern history.

A decade after the worst economic downturn since before Word War II, the online information service FitSmallBusinesss analyzed the 50 states for their vulnerability to another downturn and found the best states were scattered across the South and Midwest.

"To determine which states are the most recession-proof in this revised study, we considered a wealth of data, including product exports, housing costs, individual debt averages, average deposits per capita, and trade," said Kelly Main of FitSmallBusiness.com. "The states best equipped to survive a recession in 2020 boast business diversity and minimal per-capita debt."

Tennessee, which was ranked No. 18 in a similar study in 2017, moved up to the No. 10 position due to its improved personal debt burden and business diversity.

Best states to survive a recession

1. Texas2. West Virginia3. Nebraska4. Indiana5. Alabama6. North Dakota7. Michigan8. Iowa9. Georgia10. TennesseeSource: FitSmallBusiness.com, based upon analysis of 11 indicators of economic performance, including debt-to-income ratios, business diversity, unemployment, credit card debt and other factors.

Tennessee's average debt-to-income ratio for of 1.285 in 2019 was down from the 1.5 ratio in 2017. The Volunteer State also enjoys more economic diversity than most states with its biggest industry - finance, insurance and real estate - comprising 16.4% of the state's GDP, or about 4 percentage points below the national average of 20% of GDP for the biggest industry.

Tennessee's average jobless rate of 3.5% last year also was below the U.S. jobless rate of 3.9%, and Tennessee's exports per capita reached $4,832 last year - a bit above the national average of $4,299.

Georgia fares even better at No. 9 in the new study, up from No. 35 in 2017. Georgia boasts the fifth-lowest average debt-to-income ratio in the nation at 1.46, down from 1.66 in 2017. It also has 10% of total spending available as stabilization funds-the sixth best in the nation.

Georgia's unemployment rate dropped from 4.8% in 2017 to 3.6% in 2019, and its deposits per capita increased from $22,000 to $24,000 per year. The state also managed to create a well-diversified exports portfolio with products shipped to China, Mexico, and Japan, among other nations.

Alabama lands as the fifth-best state to survive a recession, up 15 positions from 2017 when it was ranked at No. 20. Its low debt-to-income ratio of 1.37 is the fourth best in the nation along with solid economic diversity; the top industry's share of GDP is just 16.5%-about 5% lower than the national average. Over the last decade, the state's GDP also rose from $173 billion in 2008 to $221 billion in 2018.