R/ECON’s economic forecast for New Jersey as of mid-2025 continues to show a slowing trajectory. Annual GDP growth is projected at just 0.5% for 2025, significantly lower than in prior forecasts and markedly below the national rate of 1.5%. Growth will slow slightly to 0.4% in 2026 before rebounding to 1.2% in 2027, though still trailing the national average. New Jersey’s job market remains weaker than the national picture, though employment growth has seen slight improvements. The state’s payroll employment is forecast to increase 0.6% in 2025, lagging behind the national rate of 1.0%. While monthly job data continues to fluctuate, the broader trend indicates continued softness in employment growth through 2027, before slightly outperforming the national pace thereafter. The state’s unemployment rate, averaging 4.7% in 2025, remains elevated and is projected to rise gradually to around 5.2% through 2026 and 2027 before stabilizing around 4.5% in the longer term.
At the national level, Moody’s June 2025 forecast now anticipates a substantial slowdown, with real GDP growth projected at 1.5% in 2025, significantly lower than the 2.8% rate seen in 2024. Growth will further moderate to 1.4% in 2026, continuing a downward trend before partially rebounding to 1.8% in 2027, still below the longer-term growth rate of around 2%. The forecast has become more hawkish on monetary policy compared to previous expectations, now projecting only two 25-basis-point reductions in the federal funds rate, scheduled for September and December 2025, with a gradual return to a neutral 3% by late 2026. Tariff increases are expected to put upward pressure on prices, with inflation projected to reach 3.7% in the second quarter of 2026. The national employment outlook has also weakened, forecasting fewer than 50,000 jobs added monthly in the latter half of 2025 and essentially no growth in 2026, with the unemployment rate projected to peak at 4.8% by the end of 2026.
Last year’s revisions to New Jersey’s population estimates showed strong growth over the last four years, supported mainly by strong international immigration, even as the state continues to experience domestic outmigration. Population growth, however, is projected to moderate over the next few years as deportations and border crackdowns limit international immigration. Indeed, our near-term projection estimates may overstate growth expectations, as the high levels of immigration driving recent trends may come to an abrupt halt. After a brief stagnation, the labor force is projected to gradually increase in alignment with these demographic patterns.
Employment gains in the state remain uneven across sectors. Recent growth has been driven primarily by the education and health services sector, with transportation and warehousing also contributing positively. This sectoral strength, however, obscures ongoing weaknesses in key areas such as professional and business services, information, and retail trade. Over the medium to longer term, modest employment growth is projected, with professional and business services and other services sectors expected to lead future gains.
New Jersey’s real estate market shows tentative signs of stabilization. Existing home sales volume has begun recovering, though persistently elevated mortgage rates and high home prices continue to limit the strength of the rebound. New home sales remain flat, while residential construction activity has slowed significantly, notably in the multifamily sector, signaling continued caution in development markets.
The R/ECON economic forecast is part of a larger economic report available to subscribers. If your organization would like to subscribe to the full economic forecast report, please contact Will Irving at will.irving@rutgers.edu.