The 10 worst state economies in America in 2026
The American economy is a complex beast, and some states are more resilient than others in the face of economic downturns. While most economists agree that the immediate threat of a recession has passed, there are still concerns about inflation, geopolitical tensions, and a bursting AI bubble that could knock the economy off track. Some states are better equipped to weather these challenges than others, and companies are taking note, choosing to set up shop in states with stable economies.
However, not all states are created equal, and some are struggling to keep up. Here are the 10 worst state economies in America in 2026, according to CNBC's annual America's Top States for Business study.
- Rhode Island
Rhode Island Governor Dan McKee paints a rosy picture of the state's future, citing national shifts in defense spending, the return of advanced manufacturing, and rapid technological innovation. However, the reality is that the Ocean State is struggling. Economic growth was the ninth weakest in the country last year, and foreign direct investment and new business formations are practically nonexistent. The state is also especially vulnerable to tariffs, with costs skyrocketing in a state where international goods trade makes up over 18% of nominal GDP.
- Maryland
Maryland's economy is in a deep hole, with economic growth and job growth nearly flatlining over the past year. The state's deep connection with the federal government next door has a lot to do with this, as Governor Wes Moore pointed out in his State of the State address. The federal government has fired around 25,000 Marylanders who have federal jobs in the state, and the Maryland Chamber of Commerce blames high costs, unpredictable taxes, and growing regulatory burdens for the state's economic struggles.
- West Virginia
West Virginia is not handling the transition from a coal-centered economy to whatever comes next well. The state's labor force participation rate is the lowest in the nation, even as prices rise, making everyday needs more and more out of reach. Economic growth and job growth rank near the bottom, but the state's housing market is a potential bright spot, with inventory near optimum, affordability good, and prices appreciating well.
- Louisiana
Louisiana faces serious exposure to two stiff headwinds in the economy: tariffs and a shrinking federal government. No state has more of its spending funded by the federal government, and with nearly one-third of the state's GDP made up of international goods trade, Louisiana's tariff costs have skyrocketed. The state has seen some of the weakest economic growth in the nation, with strong but uneven job growth and modest improvement in GDP.
- Kansas
The housing market in Kansas is a study in contrasts, with tight inventory and modest price appreciation. The state is not doing well in attracting workers, and job growth is weak. However, overall economic growth was reasonably good last year.
- South Dakota
Economic growth was modest last year in South Dakota, but state officials point to nearly 4,000 new business filings in the quarter, surpassing first-quarter filing totals from each of the previous six years. However, the comparisons were relatively easy, and the state ranked 35th in new business formations per capita last year. Once businesses do get off the ground, they stand a good chance of surviving, with the state ranking No. 15 in small business survival index.
- Alaska
Alaska is heavily dependent on the federal government, which accounts for more than 45% of state spending. The state has among the largest percentages of federal employees in its workforce, and the Trump administration is moving to expand drilling in the North Slope and pursue an 807-mile natural gas pipeline. However, the pipeline and any economic windfall that comes with it are still years away.
- New Hampshire
New Hampshire's fiscal situation is anything but rock solid, with spending outpacing revenues and public employee retirement systems underfunded to the tune of more than $5.5 billion. Job growth is tepid, and the survival rate for new businesses is among the lowest in the country. However, the state's economy is growing at a healthy pace, with new residents fleeing higher taxes in neighboring states like Massachusetts.
- North Dakota
The days of North Dakota's oil frenzy are long gone, and even the surge in oil prices at the start of the Iran war was not enough to get companies to resume drilling in the Bakken Shale. Economic growth in the state was the lowest in the nation last year, and new business formations were also among the lowest. The state did build up its reserves during the flush times, and the state could last nearly a year on its total fund balance if all else failed.
- Oklahoma
Oklahoma is among the most dependent on federal funding, with more than 40% of state spending coming from Washington, D.C. This leaves the state vulnerable to potential federal cuts, and economic growth was moderate last year, leaving the housing market under some stress. The state's economy score is 172 out of 415 points, with a grade of D.
