New Jersey’s Summer 2026 economic outlook presents a picture of tempered growth and a labor market that, while stabilizing, remains under pressure. The state closed out 2025 with solid GDP growth, but the momentum is expected to ease considerably over the near term, with growth projected at 0.9% in both 2026 and 2027, roughly a full percentage point below the national pace. On the employment front, payroll jobs grew 0.5% in 2025 on an annual average basis, matching the national rate after benchmark revisions. The outlook for 2026 shows weakening, with employment expected to edge up just 0.2%, consistent with the expectation of a national slowdown in hiring. The picture improves somewhat in 2027, with job growth rising to 0.5%, gradually converging toward and eventually slightly outpacing national growth rates over the medium term. The unemployment rate, which averaged 5.3% in 2025, is forecast to improve to 5.1% in 2026 and 5.2% in 2027, remaining more than half a point above the national rate before easing over the longer term.
At the national level, Moody’s June 2026 baseline forecast points to continued but moderate growth. Real GDP growth is projected at 2.1% in 2026, holding steady from the prior year and slightly above the 2.0% estimate at the time of our last forecast. The pace is expected to ease modestly to 1.9% in 2027 and 2.0% in 2028, before picking back up to 2.5% in 2029. Policy uncertainty continues to shape the outlook. Following the current presidential administration and a Republican-controlled Congress, Moody’s forecast incorporates the effects of higher tariffs, shifts in monetary policy, and changes in fiscal policy. The current effective tariff rate of approximately 8% is assumed to remain elevated through the end of the decade before gradually retreating toward the pre-administration level of around 2%.
The national labor market has shown surprising resilience in the first half of 2026, averaging nearly 114,000 payroll jobs added per month through May. However, gains have been concentrated in a narrow set of sectors, and Moody’s anticipates a deceleration in the second half of the year, with monthly job creation slowing to around 50,000. This would bring the annual employment growth rate down to 0.3%, from 0.5% in 2025. Over the medium term, growth is expected to settle in the 0.4% to 0.6% range, while the unemployment rate inches upward to a peak of 4.6% in 2027. Adding to the complexity, energy price pressures tied to the conflict with Iran are expected to keep inflation elevated through next year, even accounting for an assumed reopening of the Strait of Hormuz in July. Against this backdrop, Moody’s expects the Fed to hold the federal funds rate steady at its current target range of 3.5%–3.75% until mid-2027.
New Jersey’s demographic outlook adds another layer of constraint to the longer-term growth picture. Population growth, which had been buoyed by strong international migration and upward revisions to Census methodology, is expected to slow sharply in the coming years. Tighter border enforcement, deportations, and restrictive immigration policy will weigh on in-migration, while the natural rate of population increase remains low by historical standards, a trend mirroring the national pattern.
At the sector level, job growth in New Jersey over the past year was driven almost entirely by Education and Health Services, which added 29,600 jobs from April 2025 to April 2026. The rest of the labor market saw an aggregate decline of nearly 24,000 payroll jobs over the same period, with losses in nearly every supersector, including manufacturing, leisure and hospitality, construction, financial activities, and federal and local government employment. The medium- and longer-term outlook is more constructive, with service-providing industries expected to lead to a gradual broadening of growth across sectors.
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.