NEW BRUNSWICK, N.J. – New Jersey’s economy will experience a rather long, but mild recession that will last about nine quarters and cut about 31,000 jobs from the employment peak of 4.08 million jobs in the fourth quarter of 2007 through the trough in the first quarter of 2010. Fortunes then will eventually improve through 2018, however, and the state will experience an average annual 0.7 percent job growth rate, according to the Rutgers Economic Advisory Service (R/ECON).
R/ECON Director Nancy Mantell made her predictions today in New Brunswick at the economic service’s semiannual subscriber conference that included the discussion “The Real Estate Market – Collapse or Revival?” Patrick O’Keefe, director of economic research at the accounting and consulting firm J.H. Cohn, with headquarters in Roseland, N.J., and former executive vice president and CEO of the New Jersey Builders Association, discussed New Jersey’s residential real estate market. James W. Hughes, dean of Rutgers’ Edward J. Bloustein School of Planning and Public Policy, reviewed the commercial market.
Mantell expects New Jersey to recapture the relatively small number of lost jobs, and then some, by mid-2011. In the two most recent recessions, New Jersey lost 247,000 jobs over nine quarters in the early 1990s and 60,000 jobs over five quarters around 2001.
During the first five months of 2008, New Jersey lost 10,900 jobs, about 3 percent of total U.S. job losses and on par with its 3 percent share of the national employment base.
“The state’s job base has barely changed since the beginning of 2006, while employment in the U.S. continued to grow until December 2007, before dipping by 324,000 jobs through May,” Mantell said. “We expect further job losses here the next two years but anticipate adding 250,000 jobs over the course of the next 10 years.”
For the 12 months starting May 2007, nearly 80 percent of the state’s new jobs were added to education and health services and to professional and business services. The balance of gains was in leisure and hospitality services, “other” services, and information. All other sectors experienced losses, with one-third each in manufacturing and finance, the latter primarily due to a softening in the housing market, Mantell observed. “Manufacturing and utilities will continue to lose jobs, though more slowly than in the recent past, and employment in the information industry will decline as well,” she said. “The cyclical nature of the construction industry will leave it with almost no net job change over the forecast period.”
While the state’s consumer inflation rate rose 4.1 percent in 2006, primarily due to high energy prices and increasing wage rates, it fell to 2.4 percent last year but is expected to rebound to 4.2 percent in 2008. The forecast calls for an average annual 2 percent rate between 2009 and 2018. R/ECON’s rationale for low state and national inflation rates is based on continued weakness in the demand for housing, vehicles and labor offsetting high fuel prices in the near term and a decrease in fuel prices in the longer term, Mantell said.
In another sign of economic malaise, New Jersey’s Real Gross State Product will decline through 2010. It is expected to experience 0.1 percent negative growth in 2009 as compared to 2008. There will be average modest growth (1.8 percent) annually through 2018.
In a continuing trend, New Jersey’s population will show slow growth. The state added 254,000 residents between 2000 and 2007, and will gain 623,000 more during the forecast period, an average growth rate of 0.6 percent per year. At that pace, New Jersey’s population will top 9 million in 2013.
R/ECON is offered by the Center for Urban Policy Research at Rutgers’ Bloustein School. The service provides its subscribers, including businesses and government agencies, comprehensive forecasting tools to help them plan operations in line with their expectations about the economic environment.
SUMMARY OF NEW JERSEY ECONOMIC FORECAST
Annual Percentage Growth
Real Gross State Product
Unemployment rate (average)
Source: R/ECON, July 2008
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