Conning’s annual State of the States Report is our ranking of the 50 U.S. states by credit quality based on our examination of economic conditions, socioeconomic trends, and the states’ balance sheets. We present the report in an interactive format offering viewers greater flexibility in reviewing the data upon which we base our conclusions.

Key Findings

• Underlying fundamentals remain stable, backed by strong balance sheets amid building headwinds.
• Tax revenue collections are still robust driven by income taxes while sales taxes are moderating.
• Population growth has slowed materially, with migration becoming less supportive for some states, though regional disparities persist.
• Employment growth has slowed and unemployment rates edged higher in several states.
• Reserve levels have plateaued and have begun to decline in various states.  
• Housing markets are softening, reflecting affordability pressures and cooling demand. 
• Cost of living and climate exposure are emerging as key long‑term structural differentiators.

Executive Summary: Conning Maintains "Stable" Outlook in 2026

Conning maintains a stable outlook for U.S. states in 2026, reflecting continued balance sheet strength and generally prudent fiscal management across most states, even as operating conditions become more challenging.

South Dakota rose 17 places to first overall, while Utah maintained its second place position. Tennessee took third place over North Carolina this year, while Texas moved up 6 places to fifth overall. These states benefit from sustained in-migration, competitive cost of living profiles, and comparatively strong balance sheets on the liability side, supporting greater fiscal flexibility. South Dakota additionally benefitted from strong personal income, GDP, and HPI growth.

Fundamentals continue to favor the Plains, Mountain West, and parts of the South, where our rankings benefit from population inflows, diversified economic growth, comparatively low cost structures, and strong balance sheets. Top states are outperforming due to a combination of disciplined fiscal management, resilient labor markets, and favorable demographic trends. 

By contrast, performance is more mixed in the Northeast and parts of the West Coast, where higher costs, slower population growth, and other structural pressures weigh on relative rankings. The lowest‑ranked states are similarly clustered among those facing persistent demographic, economic, and fiscal constraints, including weak population trends, elevated cost burdens, and limited fiscal flexibility. 

While year to year movement occurs, the bottom tier continues to reflect longer-term structural pressures and or cyclical weakness. West Virginia fell three spots to 50th overall. Maryland (49th), California (48th), and Rhode Island (47th) each experienced declines of 27, 17, and 21 places, respectively. Louisiana improved modestly to 46th place, up 4 spots in this year’s report. 

Ranking movements were more pronounced in 2026 than in our 2025 report. A total of 23 states moved 10 or more positions year‑over‑year (YoY), compared with 21 last year, and 11 states saw a shift of more than 20 positions versus just six in the prior period, despite no changes to our methodology. 

Our framework, updated last year, incorporates cost of living and catastrophe losses per capita to better capture affordability pressures and climate-related risks. The wider dispersion observed in 2026 reflects the fading of the post‑pandemic period of broadly strong performance, as revenue growth moderates, migration slows, and widening differences in cost structures and balance sheet positioning translate more directly into relative ranking outcomes.

About Conning
Conning is a leading investment management firm with a long history of serving insurance companies and other institutional investors. Conning supports clients with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America. Conning is part of Generali Investments Holdings S.p.A.

Disclosure

©2026 Conning, Inc. Conning, Inc., Goodwin Capital Advisers, Inc., Conning Investment Products, Inc., a FINRA‑registered broker‑dealer, Conning Asset Management Limited, and Conning Asia Pacific Limited (collectively “Conning”) and Octagon Credit Investors, LLC, Global Evolution Holding ApS and its subsidiaries, MGG Investment Group LP and certain of its affiliates, and Pearlmark Real Estate, L.L.C. and its subsidiaries (collectively “Affiliates” and together with Conning, “Conning & Affiliates”) are all direct or indirect subsidiaries of Conning Holdings Limited which is one of the family of companies whose controlling shareholder is Generali Investments Holding S.p.A. (“GIH”) a company headquartered in Italy. Assicurazioni Generali S.p.A. is the ultimate controlling parent of all GIH subsidiaries. Conning & Affiliates have investment centers in Asia, Europe and North America. This document and the software described within are copyrighted with all rights reserved. No part of this document may be distributed, reproduced, transcribed, transmitted, stored in an electronic retrieval system, or translated into any language in any form by any means without the prior written permission of Conning & Affiliates. Conning & Affiliates do not make any warranties, express or implied, in this document. In no event shall any Conning & Affiliates company be liable for damages of any kind arising out of the use of this document or the information contained within it. This document is not intended to be complete, and we do not guarantee its accuracy. Any opinion expressed in this document is subject to change at any time without notice.

This document is for informational purposes only and should not be interpreted as an offer to sell, or a solicitation or recommendation of an offer to buy any security, product or service, or retain Conning & Affiliates for investment advisory services. The information in this document is not intended to be nor should it be used as investment advice.  

Copyright 1990-2026 Conning, Inc. All rights reserved. 
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