NEW BRUNSWICK, N.J. – Since January 2008, when the worst recession since the Great Depression began, New Jersey has lost 269,000 jobs. About 45,000 jobs disappeared from last May through September alone, negating signs of a potential economic turnaround in the early spring.
Over the last decade, economists had been able to point to the public sector as a source of employment growth – but no longer. New Jersey has lost 42,400 public sector jobs since May, an important reason why the state’s economy has been “just inching along,” according to Nancy Mantell, director of the Rutgers Economic Advisory Service (R/ECON).
Mantell made her observation during R/ECON’s semiannual subscriber conference at the Edward J. Bloustein School of Planning and Public Policy in New Brunswick. She and Bloustein School Dean James W. Hughes assessed the state and region’s economic landscapes. They were joined by Gil Medina, executive managing director at Cushman and Wakefield Inc., and Patrick O’Keefe, director of economic research at J.H. Cohn LLP, who discussed the status of New Jersey’s commercial and residential real estate markets.
Of the public sector jobs lost since May, about 26,000 came from local government, “which has finally started to cut jobs in response to fiscal difficulties,” Mantell said. She added that about 15,000 federal positions were eliminated as the 2010 Census was finalized and temporary workers were let go. Mantell also noted that the public sector will show close to no growth through R/ECON’s forecast period, which ends in 2020.
Mantell foresees New Jersey’s unemployment rate averaging 9.7 percent in 2010, matching the national average. The rate should return to its 2009 level – 9.2 percent – next year and fall to 5.5 percent at the end of the forecast.
In the near term, most economic activity will be in the service sectors and finance, with very modest growth in construction. “Construction jobs won’t reach the levels attained at the end of the last up cycle in 2008 during the forecast period,” Mantell said, adding that Gov. Chris Christie’s decision to cancel the ARC railroad tunnel project to Manhattan will also deal a healthy blow to the sector.
After three consecutive years of negative nonagricultural employment growth, Mantell predicts an employment upswing of 0.7 percent next year, and a yearly average gain of just under 1 percent from 2011 to 2020. “Our forecast indicates that growth will be so slow that the average number of jobs in the state will not surpass the 2007 peak level – 4,078,900 – until 2016,” she said.
For a bit of good news, R/ECON’s director forecasts an increase in personal income: 3.3 percent in 2010 and 4.2 percent next year. The average income gain for the balance of the forecast is 4.6 percent. Consumers will continue to benefit from very low inflation as well, Mantell said. Consumer prices will rise 1.9 percent this year and 1.7 percent the next. From 2011 on, Mantell predicts hikes in consumer prices to average 2 percent.
SUMMARY OF NEW JERSEY ECONOMIC FORECAST
|Annual Percentage Growth|
|Unemployment Rate (average)||9.2%||9.7%||9.2%||6.5%|
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