Conning maintains a stable outlook for U.S. states in 2026, reflecting continued balance sheet strength and generally prudent fiscal management across, 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 six 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 benefited from strong personal income, GDP, and house price index (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 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 four 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.
For the full report from Conning, click here.
