From Princeton Perspectives:
2025 New Jersey Economic Outlook
Real Estate – In real estate, the housing market could see moderate growth, however, housing affordability will remain a challenge. New Jersey’s municipalities are currently contemplating the impact of having to come up with a Housing Element and Fair Share Housing Plan by June 30ththis year. Using the numbers released by the state in 2024, Mercer County municipalities would be required to rehabilitate a total of 1,800 currently existing affordable units county wide, plus build 3,500 new units. Given that usually market rate housing is built to support the affordable units this could mean that thousands of new homes need to be built to meet those numbers. Certainly, housing is a big contributor to our local economy what with labor, lumber, supplies, and equipment.
Unemployment – Unemployment rates are expected to remain stable and low, although we may face shortages in certain sectors. With our states focus on clean energy there could be a boost in jobs related to renewable energy and infrastructure improvements.
State Budget – Governor Phil Murphy delivered his 2025 State of the State Address in the Assembly Chamber at the New Jersey State House January 14, 2025 (too late for this publication) and as of this posting his office released this statement:
“Over the past seven years, we have built a state that is stronger, fairer, and more prepared to face the future,” said Governor Murphy. “But our job is far from over. As we begin our final year of partnership, we remain more committed than ever to delivering economic security and opportunity to every New Jerseyan. And over the next 12 months, we are going to run through the tape in making New Jersey the best state—anywhere in America—to live, work, and raise a family.”
There will undoubtedly be budget challenges for New Jersey in 2025 and hopefully there will be fiscal responsibility, especially with the governor’s election happening this year. The new governor must deliver stability in their public policy initiatives as much of the new spending in the budget is not sustainable, and we should be hearing some good ideas to do so from the gubernatorial candidates. We have used $2.4 billion from New Jersey’s budget surplus, not a desirable move. The increase in the corporate business tax to 11.5% has placed us in an uncompetitive position making it harder to attract new business to New Jersey. This rate is the highest in the country and hopefully this unenviable position will receive sorely needed attention in 2025.
We cross our fingers that inflation rates will stabilize in 2025 as higher interest rates can and will affect consumer spending and the housing and auto markets, thus affect our economy.
Small Business – When we think about our local mom and pops and independent businesses there is concern about the new administrations mass deportation and tariffs. Immigrants are predominately working for small businesses who are still dealing with problems that emerged over the last few years: skilled labor shortages, supply chain issues, high costs thanks to inflation, and shrinking profit margins. Prices are still high and with the promise that on day one of the administration to impose tariffs on Canada, Mexico and China, there is valid concern of retribution and increased pricing on imports from these three countries. Mexico alone supplies almost 40% of all fruits and vegetables consumed in the U.S.