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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), and the U.S. is edging closer to fulfilling this dictionary definition.
In a recent MarketWatch report, Mark Zandi, chief economist at Moody’s Analytics, said 22 of America’s 50 states — as well as 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 states that Zandi believes are in recession are: 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.
Some of these states share similar struggles: slumping farm economies and slowing manufacturing industries. 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 Donald 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.
It’s important to keep that in mind while reading Zandi’s assessments. But since he is an economic expert, Zandi’s concerns shouldn’t be quickly dismissed.
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 as 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.
As a general rule of thumb, it’s a good idea to have at least three months’ worth of expenses in an emergency fund, though most experts recommend at least six months’ 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 account to stash your emergency funds — this will allow you to earn interest as you go.
A high-yield account, such as a Wealthfront Cash Account, can be a great place to grow your emergency funds, offering both competitive interest rates and easy access to your cash when you need it.
A Wealthfront Cash Account can provide a base variable APY of 3.50%, but new clients can get a 0.65% boost over their first three months for a total APY of 4.15% provided by program banks on your uninvested cash. That’s over nine times the national deposit savings rate, according to the FDIC’s October report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.
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.
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.
You may also want to look into alternative asset investments. Stock markets tend to fall during a recession. So it could be worth assessing other ways to grow your money – such as through real estate, gold and art.
While these investments can be riskier, meaning you have a greater potential of losing your money, they can also come with greater reward potential.
These investments can also be easier than you may think. For instance, you don’t need to buy a property and deal with the headaches of being a landlord in order to make money off of real estate.
Mogul is a real estate investment platform offering fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or midnight maintenance calls.
Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
Every investment is secured by real assets, not dependent on the platform’s viability. Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.
Then there’s gold: a popular safe-haven asset during economic downturns and stock market volatility.
Gold has had a record year, continually exceeding its highest ever recorded price. One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Thor Metals.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
To learn more, you can get a free information guide that includes details on how to get up to $20,000 in free metals on qualifying purchases.
Finally, you could invest in art, which can be recession-resistant as it tends to hold better value and recovers faster than other assets like the stock market.
Masterworks is changing the game for investors with capital on hand, but without strong connections to the art world.
The platform gives you the ability to invest in shares of contemporary art, including paintings by well-known artists like Banksy, Picasso and Basquiat.
As an investor using Masterworks, you can select the fine art you want to invest in — with every piece of artwork vetted by their team of industry experts. Less than 3% of all artwork passes the vetting process, making each investable asset a potentially prime candidate for future appreciation.
