From the Asbury Park Press:
As New Jersey heads into 2007, many companies are singing a similar tune. Their sales are growing and they see opportunities ahead, but the uncertain national economy and the high cost of doing business in the Garden State discourage them from taking on new employees.
The sentiment underlies a trend economists expect to continue next year. Business owners are saddled with a host of worries, from rising energy prices to a slowing real estate market, so they are holding the line on the only expense they can control: Hiring.
“The top thing on the state’s to-do list in 2007 is to become competitive again for new job growth,” said Joseph J. Seneca, an economics professor at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy. “That’s not an easy fix.”
Seneca and his colleague, James W. Hughes, said New Jersey’s job market has been lagging the U.S. job market for nearly three years. The state is on pace to add 21,000 jobs in 2006, less than half of its new jobs in 2005.
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t is not a strong performance when compared with the national economy. For the first 11 months of 2006, the nation’s private sector grew by 1.24 percent. New Jersey’s private sector grew by .41 percent, the Rutgers economists said.Behind the numbers is a gloomy attitude among business owners. A survey by the New Jersey Business and Industry Association, the state’s biggest business lobby, found 51 percent expect the state’s economic conditions to deteriorate during the first half of the year, while 12 percent expect an improvement. It echoed the business sentiment during the recession from 1989 to 1992.
“It’s tougher than ever for New Jersey firms because we are a higher-cost state than a lot of other states and countries we compete against,” association President Philip Kirschner said. “That is starting to have a real negative effect.”
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The high cost of living causes headaches throughout the economy, experts said.Patrick J. O’Keefe, chief executive officer of the New Jersey Builders Association, said that’s a big reason why building permits declined 17 percent in 2006 and why he expects another slow year in 2007.
“The price of housing . . . is beyond the reach of all but the most affluent households in New Jersey,” O’Keefe said. “As a consequence, most purchasers have withdrawn from the market. They recognize that even with interest rates being at still relatively low levels, they can’t afford to pay what the prospective sellers are demanding.”