The company’s State of the States municipal credit research report uses 13 credit indicators to compare state credit quality and assign a ranking, with No. 1 being the highest and No. 50 being the lowest. Connecticut, which ranks among the bottom 10 in nine of the 13 categories, finished 44th six months ago, but was again 46th one year ago.
The state was 42nd in personal income growth and population growth; 48th in both employment growth and economic debt per personal income; 49th in gross domestic product (GDP) growth; and 50th in debt per capita. However, it placed fifth in median household income and fourth in state GDP per capita.
The only New England state to finish behind Connecticut was Rhode Island, at 47. New Hampshire placed seventh, followed by Massachusetts (23rd), Maine (37th), and Vermont (45th).
The top five states in the country were Utah, Nevada, Idaho, Colorado and North Dakota.
With June 2019 marking the 10-year anniversary of the official end of the Great Recession, the new report also reviews the evolution of state credit quality during the past decade. During that time, New Hampshire saw the most improvement, moving from 37 in 2009 to 7 in this latest edition. Other states with outsized gains over the last 10 years include Nevada, which rose from 29 in 2009 to 2nd place in 2019, and Utah, which climbed from 22 to No.1.
Conning noted that, although the 10-year GDP growth cycle has led some economists to posit that the U.S. is due for a financial downturn, states overall are better prepared for a recession now than in 2009. However, three main challenges – liquidity, expenditures exceeding inflation and a lack of general fund reserves – remain a significant hurdle for several states.
The report found that several states are facing significant infrastructure spending and pension obligations that may challenge their fiscal stability should a downturn arrive.