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Five States That Will Lead US Out of Recession

Wednesday, 3 Jun 2009 | 3:03 PM ET

If you’re not prepared to go to Australia to ride out the recovery, great news! A new report shows the five U.S. states poised to lead the nation out of recession.

Oregon Bridge
Photo by: Geoff Parsons
Oregon Bridge

You might want to get out your hiking boots and trail mix because most of the states are out in the northwest: Colorado, Idaho, Oregon, Texas and Washington.

Those are the states where job growth is expected to sprout first — in the fourth quarter of this year — according to Moody’s Economy.com, which conducted the survey.

The criteria for the survey included the labor market, income, credit quality/banking, real estate and consumer spending. Moody's conducts a regional employment forecast as well as an "adversity index" to gauge the status of state economies.

In the case of the northwestern states, the reason they got picked is because of their high concentration of high-tech companies, Moody's economist Andrew Gledhill said. Analysts expect a pick-up in tech spending as the recession gets going.

"[W]e feel that pent-up demand for high-tech equipment that has been furthered in part by the financial crisis could benefit states with these kinds of links," Gledhill said.

As for Texas, it was the oil industry: The strength of the industry made the lone-star state one of the last states to join the recession, and therefore will make it among the first out.

Housing was another factor: All five states had better-than-average household credit, which left them in shallower holes than other states, like, say, California.

Don't worry, California. You'll be back.

And, in case you’re wondering where your state is in the lineup, Moody’s has come up with the next waves of states to start showing signs of recovery.

The second wave, expected to hit in the first quarter of 2010, includes a lot of southern states—and Dakotas. That group includes: Alabama, Georgia, Nebraska, New Mexico, North Carolina, North Dakota and South Dakota.

This group had relatively minor recessions that affected cyclical industries like manufacturing, Gledhill said, and should be able turn those minor recessions into minor recoveries when the economy starts to turn.

"Plus, housing has not been as much a factor for some of this group, which is such a hindrance elsewhere," Gledhill explained.

The third wave, expected to show growth in the second quarter, is all across the map. Those states are: Alaska, Arkansas, Iowa, New Hampshire, South Carolina, Tennessee and Wyoming.

If your state wasn’t mentioned — sorry — it’s in the remaining 31, which isn't likely to start popping until the third quarter of next year.

The most sluggish growth is in the northeast (ahem, Wall Street), midwest (*cough*cough* GM ), and Florida (enough said).

Gledhill said the impact of the housing crisis could also be a factor in California, Florida, Arizona and Nevada, causing those states to be slow to recover.

There was only one state that, as of the end of March, still had enough growth that it wasn’t technically in recession.

Can you guess what it is?

You betcha, it’s Alaska!

Pony Treats:

Down—But Not—Under. Australia, dubbed the best place to ride out the recession, really dodged a bullet on this one: Its economy actually grew last quarter, meaning it never officially entered recession, Reuters reports.

Sleep Cheap in the Big Apple. Now's the time for that romantic getaway or girls' weekend in New York City: New York hotels, desperate for those tourist dollars, are slashing their rates, the Daily News reports. For example, you can stay at the famed Waldorf-Astoria on Park Avenue for $200 a night.

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Contact Pony Blog

  • Cindy Perman is a writer at CNBC.com, covering jobs, real estate, retirement and personal finance.

  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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