Fall 2011 R/ECON Conference: Brakes on Weak New Jersey Economic Recovery
Citing both new and ongoing national and international crises as contributing factors, Rutgers economist Nancy H. Mantell today said New Jersey’s economy has weakened over the past year, even since the last Rutgers Economic Advisory Service (R/ECON) forecast in July.
Mantell, addressing R/ECON’s semiannual subscriber conference, said despite the largely dismal global economic climate, there was some modest good news in New Jersey: Employment is higher than last year, output is up, and inflation and interest rates remain low. “The forecast remains positive, although the pace of the recovery is not as rapid as we would like,” Mantell acknowledged.
Along with Mantell, James W. Hughes, dean of the Bloustein School, discussed national economic trends while University Professor and economist Joseph J. Seneca, also of the Bloustein School, described the overall economic environment, including monetary policy, fiscal policy, and foreign and domestic debt.
Mantell’s forecast calls for nonagricultural employment to grow 0.1 percent by year’s end and to average 0.9 percent annual growth (34,700 jobs) through 2021. Nonagricultural employment fell 1 percent in 2010. She also predicted personal income to rise 4.2 percent – double 2010’s rate – and to average 4.3 percent yearly through the forecast period. While the state’s economy lost 11,100 jobs in September – 5,800 in the private sector and 5,300 in the public sector – the unemployment rate dipped to 9.2 percent from 9.4 percent in August. Mantell sees a further drop to a monthly average of 8.8 percent in 2012 and for unemployment to average 6.2 percent annually through the forecast.
“New problems, primarily at the national and international level, keep cropping up that diminish the chances of an ongoing strong recovery,” Rutgers’ economist said. “The stasis in Washington, the likelihood that monetary policy has gone about as far as it can go, the prospect of an extremely long and bitter electoral process, the problems facing the world’s economies because of the European debt crisis and the turmoil in the Mideast all make doom and gloom seem rational.”
Mantell observed that between January 2008 and January 2011, New Jersey’s net job loss was 265,700. The only growth sector over the full three-year period was educational, health and social services. Although the state has begun to recover its losses, growth will be so slow that the average number of jobs in New Jersey will not surpass the 2007 peak of 4,079,000 until 2016. By the end of 2021, the state’s employment base will surpass the high-water mark by 156,000 jobs (3.8 percent).
Since January, the private sector has added 31,200 jobs and the public sector has lost 1,400. “The positive note here is that while gains have been small, they have occurred in every sector of the private economy except manufacturing and information, and even the latter might have grown were it not for the strike at Verizon,” Mantell said.
New Jersey’s consumer prices were stable in 2009 and rose 1.8 percent last year. The recovery and expansion beginning this year will be accompanied by an inflation rate averaging 2.1 percent a year from 2010 to 2021. The rate will be close to 3 percent in 2011 due to high inflation in agriculture and oil prices in the early part of the year, Mantell explained.
New Jersey added 378,000 residents between 2000 and 2010, an average annual rate of 0.4 percent, half as fast as the national population growth. Population growth here will average 0.6 percent annually through the forecast compared to 1 percent a year for the U.S. The state’s population will top 9 million in 2016, Mantell predicted.
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