From the Press of Atlantic City:
The Federal Reserve’s forecasting gauge for New Jersey’s economy has turned negative for the first time in 17 years.
The leading index of the Fed’s Bank of Philadelphia predicts the state’s economy will shrink 0.2 percent during the next nine months.
Jason Novak, senior economic analyst for the Philadelphia Fed who oversees the forecast, said Monday the outlook has dimmed mainly due to joblessness.
While the index includes information on housing permits, interest rates, business delivery times and more, the labor component is driving the decline. Joblessness in New Jersey jumped from 4.9 percent to 5.4 percent in May.
“It’s just this unemployment rate issue, that’s what concerns me,” Novak said. “It looks a lot like Pennsylvania and Delaware do.”
The weaker economies in those states turned their forecasts negative last year. He said New Jersey’s worsening outlook could be a blip that might be reversed next month or the start of a prolonged slowdown similar to neighboring states.
Building permits fell sharply in the state in the May index, released Friday, and delivery times turned negative. The most positive measure for the month was a slight increase in payrolls, Novak said.