By Will Irving
R/ECON’s economic forecast for New Jersey as 2024 drew to a close once again shows a slowing trajectory, with annual gross domestic product (GDP) growth in 2025 projected to slow more sharply than in the prior forecast. This is true even as the third-quarter estimate for New Jersey showed relatively strong growth and despite an improved yet still slowing outlook for the U.S. Real GDP for the state is projected to tick up in 2026 and resume modestly stronger growth thereafter.
Despite some large monthly swings and revisions to prior months’ estimates, New Jersey’s job market has largely been characterized by stasis over most of 2024. There has been little overall change in payroll employment, the number of unemployed, or the labor force participation rate. The state’s unemployment rate has remained elevated and is projected to remain so over the longer term.
At the national level, Moody’s December forecast calls for stronger near-term growth than at the time of our summer forecast, boosted by upward revisions to the 2023 annual growth rate and strong growth in 2024. The 2.6% fourth-quarter growth rate in Moody’s December forecast was projected to bring annual growth to 2.8%, and the Q3 real GDP growth for the nation has since been revised upward from 2.8% to 3.1%. Moody’s December forecast also anticipated the 25-basis point cut in the federal funds rate announced by the Fed on December 18, and two more 25-point cuts in 2025, consistent with the Fed’s announcement (and down from the prior expectation of four such cuts next year). The national forecast still anticipates a reduction to the target rate of 3% by late 2026.
New Jersey will finish 2024 with a modest increase in payroll employment on a year-over-year average basis. However, this increase masks a weakening trajectory in the second half of the year that portends a sharper slowdown over the next two years, consistent with the national trajectory. Recently released revised population estimates from the U.S. Census Bureau reflect much stronger population growth than prior releases, indicating a total population increase of over 230,000 over the last three years. The number of people in the labor force is down slightly this year and is projected to continue a moderate decline over the next two years, though a continuation of the stronger population growth trajectory could affect this outlook. The unemployment rate is forecast to remain elevated as employment growth slows.
As of Q3 2024, prices continue to climb for both new and existing homes on a year-over-year basis in New Jersey, with sales relatively flat.
The Winter 2025 R/ECON Forecast for New Jersey utilizes the Moody’s economy.com national forecast as of December 2024, along with New Jersey quarterly GDP and state employment and unemployment data through Q3 2024, and state quarterly personal income data through Q3 2023. The Rutgers Economic Advisory Service (R/ECON) was created with the mission to improve the quality and accessibility of tools for economic forecasting and policy simulation. With the support of the New Jersey State Policy Lab, R/ECON employs a comprehensive set of tools to provide accurate and timely assessments of the New Jersey economy.
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.