In contrast to all the far-reaching speculations that Nevada and California would be leading the country in economic hardship, new conclusive research by WalletHub indicates a contrary reality. The states with the Americans facing worse economic hardships are most of them based in the Great Lakes and Southeast regions, with Texas leading the country by economic hardship, just before other states that were surprising many people.
Texas: The unexpected top dog
Texas repeatedly appears as the number one state to be in financial trouble across many WalletHub reports, even though the state boasts a healthy $2.4 trillion economy that would place it among the world’s largest if Texas were an independent nation. The Lone Star State is proof that macroeconomic prosperity can conceal widespread individual financial struggle at the family level.
Among some of the major causes of Texas’s financial strife are:
- 8.2% of the population have one or more credit accounts in forbearance or payment deferral, third-highest in the nation
- Third-lowest state average credit score for Q1 2024
- 25.8% year-over-year surge in consumer bankruptcy filings, seventh-highest in the nation
- High volume of Google searches of “debt” and “loans,” indicating pervasive economic desperation
The Federal Reserve Bank of Dallas noted that Texas was one of the states under the greatest pressure from inflation, with 52% of Texans “highly stressed about inflation” as opposed to just 47% of Americans overall.
Florida: The sunshine state’s financial storm
Florida always falls in the top 5 of the most financially distressed states and most often ranks second or fifth based on the length of the study. The fiscal distress of the state is even more alarming considering that it is one of the economic giants.
Florida’s fiscal distress is in many forms:
- 46% of Florida families are barely making ends meet, which accounts for over 4 million families
- 13% of the families below the federal poverty level, Florida the 44th state in financial distress
The cost of living has increased more quickly than earnings, with the highest growth occurring in food and transportation expenses. Removal of COVID stimulus from taxes has placed added stress on household budgets
Floridian regional trends indicate families in Miami-Dade County as most hard-pressed, at 53%, followed by Broward at 48% and Palm Beach at 47%.
The full rankings: Most financially distressed states
Based on the latest WalletHub reports, the financially distressed states are;
| Rank | State | Key Indicators |
| 1 | Texas | 8.2% accounts in distress, 25.8% bankruptcy increase |
| 2 | Louisiana | 11.6% accounts in distress, 642 average credit score |
| 3 | Nevada | 7.5% accounts in distress, 24.3% bankruptcy increase |
| 4 | Kentucky | High distress accounts, low credit scores |
| 5 | Florida | 46% households struggling, rising costs |
| 6 | Tennessee | 50.5% housing insecurity, 15.6% food scarcity |
| 7 | Mississippi | 19.1% poverty rate, 634 average credit score |
| 8 | Oklahoma | High distress indicators across categories |
| 9 | South Carolina | Significant account distress levels |
| 10 | Arizona | Multiple financial stress indicators |
Understanding the methodology
WalletHub’s full dissection ranked states based on nine important metrics in six categories:
Credit score metrics:
- State mean credit score
- Year-over-year changes in credit scores
Account distress indicators:
- Percentage of individuals who have accounts in forbearance or overdue payments
- Mean number of troubled accounts per individual
- Year-over-year changes in troubled account percentages
Bankruptcy trends:
- Year-over-year bankruptcy filing fluctuations
Search behavior analysis:
- Google search volume on “debt” and “loans”
WalletHub defines financial trouble as having “a credit account that is in forbearance or has its payments postponed, i.e., the account owner is temporarily permitted not to make payments because of financial hardship”.
Michigan: The great lakes exception
Though not explicitly asked, Michigan deserves to be highlighted in particular because it has topped financial distress rankings in more than one study. The state represents outstanding challenges including; Highest percentage of accounts per person in financial distress nationwide and an over 70% increase in persons with troubled accounts between 2023 and 2024.
Nearly 2 million Michigan families cannot afford basic needs including housing, food, and healthcare.
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