NEW BRUNSWICK, N.J. – Though shallower than the national recession, New Jersey’s economic downturn will last longer with expansion not occurring until 2016, economist Nancy Mantell, director of the Rutgers Economic Advisory Service, predicted at today’s R/ECON semiannual subscriber conference.
The state’s economy will begin to revive in 2011, but it will take until the end of the forecast period – 2019 – for New Jersey’s employment base to exceed the 2007 peak by 118,000 jobs, or 2.9 percent, Mantell added. “The country, in contrast, will begin job expansion three years earlier, at the beginning of 2013,” she said, “and by 2019, it will have 7.7 percent more jobs than at the previous peak.”
Dean James W. Hughes of the Edward J. Bloustein School of Planning and Public Policy joined Mantell with observations about the national economic picture. Joel Cantor, director of Rutgers’ Center for Health Care Policy, spoke about the health care industry’s contributions to New Jersey’s economy.
New Jersey’s recession began in January 2008, one month after it started nationally, and through July 2009, the state lost 161,300 jobs, or 4 percent of its employment base, Mantell said. After gaining 700 jobs in August, New Jersey dropped another 12,700 jobs in September. During the recession’s first year, the state and national job bases declined at the same rate, but since 2009, the Garden State has shed jobs at a slower pace: 1.8 percent compared to 2.9 percent nationally.“Unfortunately, New Jersey has now lost more jobs than it gained during the expansion of 2003 to 2008, while the U.S. job base remains above the 2003 low point,” Mantell observed.
With the deepening recession, New Jersey’s unemployment rate has increased sharply, from 4.5 percent in December 2007 to 6.8 percent a year later and to 9.8 percent last September. At the same time, growth in personal income has fallen, from 5.7 percent in 2007 to 3.2 percent in 2008. Income growth will fall to less than 1.5 percent in 2009 as the recession persists, but over the rest of the forecast period, incomes will rise an average 4.2 percent annually.
The general weakness in the state’s economy can be seen in declining home and vehicle sales and tax collections, Mantell said. The state did benefit from the federal government’s two-month Cash-for-Clunkers program, however, which resulted in the sale of 26,000 vehicles here during July and August, and added $50 million in sales tax and motor vehicle fees to Trenton’s coffers.
The only growth sectors during the long slump have been educational and health services, and “other” services, while most of the job losses have been in manufacturing, construction and professional and business services. “The professional and business services sector will turn around during the recovery, and will be, as it was during the past decade, a strong contributor to growth,” Mantell predicted.
The “other” services sector also should experience job gains, while after further losses in the next several years, manufacturing employment will stabilize. Construction should pick up in 2010, she added.
Rising energy prices during the first half of 2008 drove New Jersey’s consumer inflation rate to 3.7 percent, but inflation turned briefly into deflation in late 2008 and early 2009 as the recession and the lack of demand for goods and all services pushed prices down. “The end of plunging energy prices and a return to a more normal economic picture in 2010 will be accompanied by an inflation rate averaging 1.9 percent per year between 2009 and 2019,” 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
|Annual Percentage Growth|
|Unemployment Rate (average)||5.5%||9.0%||9.5%||8.5%||6.2%|
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