While a difficult winter has depressed job growth early in 2014, New Jersey actually has experienced slight improvement over a comparable period last year, according to Nancy Mantell, director of the Rutgers Economic Advisory Service (R/ECON). But Mantell predicts the state is on pace to add only about 24,400 jobs – a growth rate of 0.6 percent or half the 2013 rate when 44,800 nonagricultural jobs were added here.
Furthermore, its sluggish recovery will prevent New Jersey’s employment base from returning to its peak level of the first quarter of 2008 until early 2018.
Mantell made her observations at today’s R/ECON subscriber conference and forecast, which presented outlooks for the regional economy and real estate market. Joining Mantell to discuss various hot real estate sectors were Anne Strauss-Wieder, principal of the transportation, economic and strategy consultancy that bears her name (warehouse/distribution), Jeff Hipschman, managing director, CBRE (data centers) and Ronald S. Ladell, senior vice president, AvalonBay Communities Inc. (multifamily rentals).
James W. Hughes, dean of Rutgers’ Edward J. Bloustein School of Planning and Public Policy, offered an overview, “Recovery After the Recovery.”
Despite 2014’s slow start, the R/ECON forecast calls for “moderate” job growth over the next three years with the creation of 136,000 jobs. By the end of the 2024 forecast period, New Jersey’s employment base will be 234,000 jobs greater than at the peak, 4.09 million jobs in January 2008, Mantell said. But the state remains the region’s laggard.“New Jersey’s slow recovery seems particularly slow in contrast to that of its neighbors, New York and Pennsylvania, as well as the U.S., where the old peak was 99.9 percent recouped last month,” she observed. “Given its slower recovery and rate of expansion, New Jersey’s share of the nation’s job base will decline from 2.9 percent to 2.8 percent in 2024.”
Mantell called New Jersey’s comeback “oddly slow,” given that real output fully recovered last year while real income fully recovered in 2012. She anticipates output to rise 2.4 percent annually over the forecast period while personal income rises at an average annual rate of 4.5 percent, in both cases, slightly slower than the expected national growth. Mantell attributes her estimates primarily to the higher cost of living and doing business in New Jersey, as well as its lower rate of population growth and smaller working-age population. Mantell believes population will increase by an average annual 0.7 percent through 2024.
“The good news here is that the state will retain its position as a high-income state – good for trade and the real estate market, if not for companies looking to locate in a place with low wages,” Mantell said. Besides earning more, consumers should benefit from low inflation, to average under 2 percent through 2024.
Also promising for the state is an unemployment rate that is predicted to fall from its March level of 7.2 percent to 5 percent during the last years of the forecast period. Though the rate has fallen substantially since 2013, it is still higher than the national mark, Mantell observed, a trend that is likely to continue. “While the height of the unemployment rate is a challenge, the real concern is that the unemployment rate has fallen primarily because people have stopped considering themselves part of the labor force,” she said.