From Joel Naroff at NJ Business:
Overview: “New Jersey’s slow economic recovery continues, but broadening job gains hold out hope that the expansion is starting to pick up steam.”
While New Jersey didn’t get hurt quite as badly as many other states during the Great Recession, its recovery has not kept pace with the nation. But there were special factors that slowed growth, including Superstorm Sandy and the collapse of the Atlantic City casino industry. With those problems fading, the economy is showing signs of coming back.
In June, the New Jersey unemployment rate gapped down to 6.1%, the lowest rate since October 2008. A decent rise in the labor force shows that workers are becoming more confident about finding a job in the state. Still, the progress on the unemployment front has been slow as the rate is well above the nation’s 5.3% level.
Job gains, which tanked with the layoffs in the gaming sector, have accelerated over the past fifteen months. While the 1% increase in payrolls between June 2014 and June 2015 was only one-half the national rate, we are finally seeing gains spread across almost all sectors. Indeed, in June, only one key component, professional and business services, posted job losses over the year.
The housing market remains the major drag on the economy, though we are starting to see some improvement even here. Housing permit requests are bouncing back. For the first five months of the year they are up 19%, nearly twice the national increase of 11%. That happened despite the continued casino shutdown driven problems in the Atlantic City region.
The real issue, though, is the state’s judicial process for handling foreclosures and the resultant limited action to resolve the problem. While over the past year there was a significant decline in the percentage of homes in foreclosure, in May, 4.9% of the mortgaged homes in New Jersey remained in foreclosure, according to CoreLogic. The next highest state, New York, was at 3.7% while the national rate was just 1.3%. In addition, almost 8.5% of all homeowners are in distress. There is a massive overhang of distressed housing that is restraining prices, sales, construction and economic growth. This problem must be resolved if the state’s economy is to get back to more normal rates of growth.
Outlook: New Jersey’s economy is very much affected by national and international economic trends. My expectation is that the U.S. expansion will pick up steam going forward. That should help drive the state’s economy forward.