FATE OF THE STATES

The geography of prosperity in the United States is on the verge of a dramatic shift. Former economic powerhouse states like California, New York, and New Jersey are losing ground to the central corridor: Indiana, Texas, North Dakota, and others.

The geography of prosperity in the United States is on the verge of a dramatic shift. Former economic powerhouse states like California, New York, and New Jersey are losing ground to the central corridor: Indiana, Texas, North Dakota, and others.

According to acclaimed analyst Meredith Whitney, the housing crisis left uneven scars across the American landscape. The states and municipalities that used booming tax revenues as an excuse to overspend and overcommit are now grappling with the consequences. Last year, at least twelve American cities in formerboom states declared bankruptcy. Dozens more were taken under state control due to their inability to manage their own finances and pay their debts. Even more widespread were the thousands of local governments that cut back on essential social services like education, public safety, and sanitation just to make ends meet.

The impacts of the new wave of will be far more devastating than those of the financial crisis. This one will harshly divide America along state lines. Corporations and individuals are already flocking to safer, more financially sound states in the central corridor, leaving behind struggling coastal states with weakened tax bases and decaying social infrastructures.

Whitney has already made headlines by daring to point out the shaky future of the municipal bond market. Now she elaborates on her research and draws a stark picture of what is to come—unless we address this issue head on. Meredith Whitney is CEO of the investment research firm Meredith Whitney Advisory Group, LLC. Prior to founding her company in 2009, she was a Managing Director and Senior Analyst for Oppenheimer & Co., where she attracted national attention for her predictions about housing prices, the mortgage industry, and the coming financial crisis. She has been on Fortune’s list of the fifty most powerful women in business since 2008 and was named to the Time 100 List in 2009.