Rutgers Economist Sees New Jersey Caught in Economic Doldrums
Garden State barely adds 24,000 jobs through November

NEW BRUNSWICK, N.J. New Jersey managed to add only 24,300 nonagricultural jobs through November 2007 about 5,600 fewer jobs compared to a similar period in 2006 prompting Nancy H. Mantell, director of the Rutgers Economic Advisory Service (R/ECON), to characterize the state as caught in the economic doldrums.

Mantell was equally pessimistic about the states chances for making a quick economic U-turn. In terms of job growth, she anticipates New Jerseys economy will underperform the nations through at least 2012.

Mantell made her predictions today in New Brunswick at R/ECONs semiannual subscriber conference, The Tri-State Economy, at the Edward J. Bloustein School of Planning and Public Policy at Rutgers, The State University of New Jersey.

James Diffley, managing director of Global Insights U.S. Regional Services Group, discussed Pennsylvanias economic prospects, while Rae Rosen, senior economist and assistant vice president at the Federal Reserve Bank of New York, spoke about the Empire States future. Dean James W. Hughes and University Professor Joseph J. Seneca, both of the Bloustein School, joined the pair and Mantell in a roundtable to flesh out the regional economic picture.

Mantell noted that during 2007, New Jerseys unemployment rate was consistently lower than the nations, at an average of 4.3 percent compared to the national average of 4.6 percent. I think our lower rate is reflective of a decline in labor force participation, Mantell said. People appear to be dropping out of the labor force rather than looking for work.

The average unemployment rate is expected to exceed the national rate in 2008 as well as through the 2017 forecast period.

Mantell sees New Jerseys final average jobless figure for 2007 as 4.4 percent and 5.0 percent this year. Through 2017, she predicts an average of 5.2 percent unemployment.

Two sectors education and health services, and professional and business services were responsible for about one-third of the Garden States job gains in 2007. The public sector added most remaining jobs, according to Mantell. As in 2006, and continuing a longtime trend, about half the job losses were in manufacturing. Employment in transportation and warehousing, information services and financial services also contracted.

The economist pegs nonagricultural job growth at 0.3 percent in 2008 down from 0.5 percent last year and predicts an average 0.8 percent through 2017. The state will add 344,000 jobs to its employment base over the 10-year forecast, and Mantell sees New Jersey coming close to retaining its current 3.0 percent of the U.S. job base. Taken together, the four service sectors (professional/business, educational/health/social, leisure/hospitality, and other) will grow 1.4 percent annually through the forecast. Financial services; transportation, trade and utilities; and public administration also will add workers.

Between 2006 and 2017, Mantell foresees a modest average 2.2 percent growth in state output (Real Gross State Product), compared to a nationwide average of 2.5 percent. This differential is due to the relatively higher cost of living and doing business in New Jersey, as well as our lower rate of population growth, expected to average 0.6 percent, she explained. The states population will exceed 9 million residents in 2012.

Personal incomes will rise an average 4.8 percent annually through 2017, while inflation averages 2.0 percent. Low inflation rates for both the state and nation over the next few years are based on the assumption that weakness in the demand for housing, motor vehicles and labor will offset the high price of fuel, Mantell said.

R/ECON, offered by the Center for Urban Policy Research at the Bloustein School, provides its subscribers, including business and government agencies, comprehensive forecasting tools to plan their operations in line with expectations about the economic environment.

SUMMARY OF NEW JERSEY ECONOMIC FORECAST
	2006	2007	2008	2008-2017
Annual Percentage Growth
Nonagricultural Employment	0.9%	0.5%	0.3%	0.8%
Real Gross State Product	2.9%	3.0%	1.2%	2.2%
Personal Income	7.2%	6.4%	5.3%	4.8%
Population	0.2%	0.4%	0.7%	0.6%
Consumer Prices	3.9%	2.6%	2.1%	2.0%
Percentage Unemployment Rate (average)	4.6%	4.4%	5.0%	5.2%

Source: R/ECON Contact: Steve Manas
732-932-7084, ext. 612
E-mail: smanas@ur.rutgers.edu