Stress Test Performed by Moody’s Analytics Reveals State’s Vulnerability to Next Recession

An aerial view of the state capitol in Harrisburg.

A recent stress test conducted by Moody’s Analytics in West Chester shows that Pennsylvania is wholly unprepared for a recession, writes Dan White for the Philadelphia Inquirer.

A recession usually significantly lowers state and municipal government revenue from taxes, often resulting in public-sector employee layoffs. During the Great Recession, almost 750,000 workers lost their jobs in state and municipal government, 65,000 of them in Pennsylvania.


Comprehensive tests by Moody’s examined how much revenue from state taxes would decline and the amount spending would rise in a hypothetical recession. It found that 35 states have already either put away the money required to either survive a moderate recession without raising taxes or making spending cuts, or by only making modest adjustments.

However, Pennsylvania has put zero in reserve to handle a downturn. This means that even a moderate recession in the next five years could hit Pennsylvanians much harder than the average American.

As it stands, if a recession came next year, Pennsylvania would need $2.3 billion in additional taxes or spending cuts just to maintain services. That would increase the taxes on every household in the state by $500 per year, three times more than the national average.

Read more about the recession test in the Philadelphia Inquirer here.

Join Our Community

Never miss a Delaware County story!

"*" indicates required fields

This field is for validation purposes and should be left unchanged.