NEW BRUNSWICK, N.J. – New Jersey is on pace to add more than 58,000 nonagricultural jobs this year, a 1.5 percent growth rate surpassing the 1.3 percent rate in 2012, when 49,100 jobs were gained. But since the trough of the recession in September 2010, New Jersey has recovered only slightly more than half its lost jobs while the U.S. recouped 83 percent of the 8.7 million jobs lost nationally.
Therein lies the tale of New Jersey’s recovery, says Rutgers economist Nancy H. Mantell. “The state’s economic outlook is improving in some respects, but generally, it trails the nation’s,” she said today at the semiannual Rutgers Economic Advisory Service (R/ECON) subscriber conference.
Mantell, R/ECON’s director, was joined by Dean James W. Hughes and economist and University Professor Joseph J. Seneca, both from Rutgers’ Edward J. Bloustein School of Planning and Public Policy, in peering into the economic future. Mantell offered short- and long-term predictions about New Jersey’s economy, while Hughes concentrated on ongoing changes to the commercial real estate landscape and Seneca addressed national economic trends.At its anticipated annual rate of growth – 0.8 percent in 2014, but 0.7 percent through the forecast period ending in 2033 – New Jersey will reach its employment peak of 4.09 million jobs achieved in January 2008 by late 2017. By the forecast’s conclusion, the employment base will be almost a half-million jobs (12 percent) larger than that previous high point. In contrast, the country will start its job expansion in mid-2014, three years earlier than New Jersey. By 2033, the national employment base will exceed the peak of 138.1 million jobs reached in January 2008 by 18 percent.
“In terms of real output, the state’s economy will grow at an average rate of 2.2 percent per year between 2012 and 2033, about 15 percent slower than the average rate expected nationwide,” Mantell said. She cited the relatively high costs of living and doing business in New Jersey, its lower proportion of working-age people and the shift in industrial composition ever more heavily into the service economy as contributors to the lower real gross state product (RGSP).
Mantell also called a projected slower average annual increase in population growth in New Jersey throughout the forecast – 0.6 percent compared to a 0.7 percent national average – as a contributor to the lower RGSP.
Mantell acknowledged that the state’s unemployment picture appears to be improving – at least on the surface. “Our unemployment rate as of last October was 8.4 percent, and we anticipate it to fall to 5.3 percent by the end of the forecast period,” she said. “Even though New Jersey’s rate has fallen substantially in the past year, from an average of 9.5 percent, it is still more than one percentage point higher than the national figure, and it will remain at least a bit higher through 2033.
“More worrisome than the comparison between the state and national statistics,” she continued, “is that much of the decline in New Jersey’s unemployment rate has come from a decrease in labor force participation rather than from an increase in resident employment.”
R/ECON’s director observed that New Jersey’s annual average rate of personal income growth also is expected to lag the nation’s over the coming decades, 4.2 percent to 4.5 percent.
“The state’s share of national employment and personal income will remain higher than its share of the national population, which will fall from the current 2.82 percent to 2.74 percent in 2033, so we will continue to be a high income state – that is, a good place for retailers but not necessarily for businesses looking for a low-wage state in which to expand,” Mantell concluded.
SUMMARY OF NEW JERSEY ECONOMIC FORECAST
2012 2013 2014 2014- 2023-
Annual Percentage Change
Employment 1.3% 1.5% 0.8% 0.7% 0.7%
Real Gross State Product 1.3% 2.2% 2.3% 2.2% 2.2%
Personal Income 3.4% 2.8% 3.9% 4.1% 4.2%
Population 0.3% 0.4% 0.6% 0.7% 0.6%
Consumer Prices 1.9% 1.6% 1.4% 1.8% 2.1%
Unemployment rate (avg.) 9.5% 8.6% 7.6% 5.7% 5.4%
Source: R/ECON, December 2013