Housing downturn slows growth

From the Asbury Park Press:

N.J. economy on rise, but growth is sub par

New Jersey’s economy appears to be picking up a bit, but growth remains well below average, partly because of the downturn in the housing market, according to the latest data from the Federal Reserve Bank of Philadelphia.

The Garden State’s economy is likely to grow by just 1.4 percent over the next year, economist Ted Crone, a vice president at the regional bank, said Tuesday.

“We’re not looking at a downturn in the state,” he said. “Growth is ratcheted down to a lower level.”

The state’s economy grew by 2.1 percent over the past 12 months but expanded just 0.1 percent in September, the same as the rate over the past few months, according to the Federal Reserve report.

The bank’s leading index, a growth forecast based on a collection of economic data, pegs growth at just 1.1 percent from September through May. That’s the highest reading for the state since March and compares with 0.6 percent last month and 0.7 percent the month before.
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For instance, the number of permits for new housing construction dipped from 1,659 in August to 1,587 in September, confirming long-held expectations that the market would have to shrink given how much home prices have risen, especially along the shore and in northern New Jersey, he said.

“People realized that this can’t keep going that way,” Crone said, adding that a strong commercial construction market is helping make up for the decline in residential construction.