NJ: Want your tax break? Get back to the office.

Posted on July 29, 2022 by grim

Disregard the source, was trying to find a non-paywalled version of this article yesterday.

From Florida Realtors:

N.J. to Companies: Make Workers Return

While companies continue to wrestle with the employee question – Should they be allowed to work remotely and, if so, how much? – a state government has gotten involved and more could follow.

The core issue: If a state grants a company tax breaks for agreeing to relocate or expand its business with its borders, the agreement usually includes a minimum number of new jobs. But while a company may indeed meet that mandate, does it count if those actual workers are doing their job remotely from another state?

In New Jersey, officials told about 800 businesses that they must require staff to work in the office or lose millions of dollars in state tax breaks which, cumulatively, total about $8.7 billion. At least two companies that employ more than 1,000 workers have balked, noting the pandemic isn’t over yet. 

But the issue won’t go away, and other states are studying New Jersey’s plan.

According to New Jersey officials, businesses who receive tax breaks under their “Grow N.J.” program must require staff to work in the office at least three days per week.

State officials say business growth isn’t based on only business tax growth. Growth programs also rely on jobs – often higher paying jobs – and increased business for local restaurants, service industries and retail establishments.

Two companies opted to turn down the tax breaks, but they’re not leaving the state for now.

“These two companies are leaving the Grow NJ program, not the state,”, added in a statement Tuesday. 

The program’s rules “are clear and we hold companies accountable to those rules,” says Virginia Pellerin, a spokesperson for New Jersey’s economic development group. “It is important to the state’s economy to have more workers back in offices supporting small businesses in their downtowns and central business districts.”

Posted in Economics, Employment, New Jersey Real Estate, Politics | 152 Comments

Recession Day?

Posted on July 28, 2022 by grim

From the WSJ:

Is the U.S. in a recession? GDP report will give us clues

On Thursday, we’ll get an important report card on the U.S. economy. 

GDP, or gross domestic product, tells us how much the economy grew or shrank in the previous quarter. 

In the first three months of the year, GDP decreased at an annual rate of 1.6%. That contraction startled economists and investors alike. 

Now, there are fears that the economy contracted for a second quarter in a row. 

“A common definition of recession is two negative quarters of GDP growth,” Treasury Secretary Janet Yellen noted in an appearance on NBC’s Meet the Press. “When we’ve seen that, there has usually been a recession.”

But Yellen notes that things are different now in the U.S. economy. “When you’re creating almost 400,000 jobs a month, that is not a recession,” she said.

Posted in Economics | 136 Comments

Is Dr. Doom Right?

Posted on July 26, 2022 by grim

From Bloomberg:

Shallow Recession Calls Are ‘Totally Delusional,’ Roubini Warns

Economist Nouriel Roubini said the US is facing a deep recession as interest rates rise and the economy is burdened by high debt loads, calling those expecting a shallow downturn “delusional.”

“There are many reasons why we are going to have a severe recession and a severe debt and financial crisis,” the chairman and chief executive officer of Roubini Macro Associates said on Bloomberg TV Monday. “The idea that this is going to be short and shallow is totally delusional.” 

Among the reasons Roubini cited was historically high debt ratios in the wake of the pandemic. He specifically mentioned the burden for advanced economies, which he said continues to rise, as well as in some sub-sectors.  

That differs from the 1970s, he said, when the debt ratio was low despite the combination of stagnant growth and high inflation known as stagflation. But the nation’s debt has ballooned since the financial crisis of 2008, which was followed by low inflation or deflation due to a credit crunch and demand shock, he added.

“This time, we have stagflationary negative aggregate supply shocks and debt ratios that are historically high,” said Roubini, who is nicknamed Dr. Doom for some of his dire predictions. “In previous recessions, like the last two, we had massive monetary and fiscal easing. This time around we are going into a recession by tightening monetary policy. We have no fiscal space.”

Posted in Economics, Employment, National Real Estate | 234 Comments

Who to blame?

Posted on July 25, 2022 by grim

From Vice:

Good News: Economy Sucks, You’re Screwed, and It’s All Your Fault, Economists Say

Good news everyone: wage increases are slowing, raises are getting smaller, layoffs are beginning to happen, and inflation is all your fault. And you should be grateful about all of this, according to a series of recent headlines from the economic and political press.

“Millennials are to blame for sky-high inflation,” a CNBC tweet recently read. Politico ran an article titled “Pay raises are getting smaller. That could be a good thing for workers.” The premise was quite simple: inflation was being driven by wage growth, inflation is hurting workers, slowing down wage growth will help workers eventually. Politico later changed the headline to “There’s one hopeful sign for the Fed on inflation. Really” after backlash but the core thesis remained the same. 

As debates over who or what is to blame for inflation and the looming threat of a recession, commentators have begun to focus on millennials again and the way they should (and shouldn’t act) in the current moment.

In the CNBC article, Smead Capital Management’s chief investment officer, Bill Smead suggested millennials were to blame for inflation for spending years saving money instead of buying homes and cars.

“So we have in the United States a whole lot of people, (aged) 27 to 42, who postponed homebuying, car buying, for about seven years later than most generations,” Smead told CNBC. “But in the past two years they’ve all entered the party together, and this is just the beginning of a 10-to-12-year time period where there’s about 50 percent more people that are wanting these things than there were in the prior group.”

This picture doesn’t exactly square with reality, however. In June, a CNBC survey of wealthy millennials (millionaires) found that nearly half were deterred from buying a car, a car, or taking a vacation because of inflation and interest rate hikes. An earlier survey in February painted a darker picture where nearly half of millennials said their savings had decreased during the pandemic and a third said their savings were less than their credit card debt.

Gains from the pandemic were largely limited to wealthy boomers and corporations, in fact. It is, after all, the wealthiest 10 percent of Americans who own 90 percent of stock and saw the pandemic rally transfer more wealth upwards into their pockets. Corporations in highly concentrated industries have been able to hijack prices and curtail wages while shifting blame to consumers and workers squeezed for fatter profit margins.

Posted in Demographics, Economics, Employment, Politics | 46 Comments

Welcome Back to … Normal?

Posted on July 22, 2022 by grim

From the APP:

NJ private-sector jobs back to pre-COVID levels. But will hiring spree last?

New Jersey added 9,800 jobs and its unemployment remained a low 3.9% in June, the state Department of Labor and Workforce Development said Thursday in a sign that businesses and consumers have continued their robust spending despite the highest inflation levels in 40 years.

With the latest job gains, the Labor Department noted, New Jersey has recovered all of the 702,000 private-sector jobs that it lost during the first two months of the pandemic in 2020.

“Despite all the worries about inflation, worries about consumer spending, the state’s job market is still very, very strong,” Rutgers University economist James W. Hughes said.

The monthly unemployment report is made up of a survey of employer payrolls to measure the number of jobs and a survey of households to measure the unemployment rate. It is considered a key economic indicator, Hughes said, since employers will begin to cut back on hiring, or even lay off workers, if they see bleak prospects ahead.
…
New Jersey’s job market, like the nation’s, has recovered from the COVID-19 losses faster than economists expected thanks to a huge federal stimulus and record low interest rates that put money in consumers’ pockets, experts have said.

When the public sector is included, the Garden State through June regained 98% of the jobs it lost during the onset of the pandemic, in line with the U.S.

The state Labor Department said Thursday that New Jersey ended the first half of the year with 96,000 jobs, a pace slightly slower than last year, but still one that would be considered historically strong.
…
“In my view we just haven’t felt the effect of the rate rises yet, and the resulting recession is on its way,” said Jennifer Hunt, a Rutgers University economist. “But I admit to being very unsure — the strength of the last jobs report was quite surprising. Inflation itself isn’t a reason to think the labor market would be hurt; it is rather the interest rate rises.”

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 98 Comments

Relief?

Posted on July 21, 2022 by grim

From the Record:

New Jersey taxpayers won’t find relief in Phil Murphy’s budget

Gov. Phil Murphy and Democrats in the state legislature are lauding themselves for providing relief and improving New Jersey’s economy with their recently passed state budget. Neither of those things are true. Let me explain.

If you are expecting tax relief soon, there isn’t any. 

Checks labeled for property tax relief won’t be sent until May 2023. The only reason some of you might get one — it’s meant only for a select few — is that you paid more in taxes than ever before. That’s right. To fuel the Democrats’ massive $50.6 billion spending plan this year residents are taxed more than ever.

Real tax relief should be immediate and permanent, the result of cutting income tax rates and other taxes, or actually lowering property taxes instead of taking money from one pocket and putting less back in the other. That’s what their ANCHOR rebate program really does. It takes too much of your money then gives you back less than you paid. Murphy calls that tax relief. It isn’t.
…

Murphy, Assembly Speaker Craig Coughlin and Senate President Nick Scutari recently spoke about how positive this budget will be for the economy, and how New Jersey’s economic growth is outpacing the nation. They made those claims on the same day that the federal Bureau of Economic Analysis released the first quarter GDP for states this year.

The results: New Jersey’s economy shrunk by 2.2%, while the overall U.S. economy contracted 1.6%.

In fact, New Jersey is faring worse than every other state on the East Coast. If it were not for West Virginia and Kentucky, New Jersey would have the worst economy in all the eastern United States. All of the high taxes are creating as bad an economic environment as the heart of Appalachia, despite having the best location in the country for a vibrant economy.

Posted in Demographics, Economics, Employment, New Jersey Real Estate, Politics, Property Taxes | 68 Comments

We’ve never wanted a recession so badly

Posted on July 20, 2022 by grim

From MarketWatch:

A ‘fake’ recession? The U.S. economy is in decent shape for now despite weak GDP

The U.S. might fall prey to recession in the near future, but it isn’t entering one now and any such talk of a shrinking economy would be “fake,” in the words of one analyst.

Worries about recession have exploded in the past several months as inflation kept rising and the Federal Reserve adopted a more aggressive strategy to increase interest rates. One poll shows more than half of the public thinks the U.S. is already in recession.

That’s not a big surprise. Rising rates tend to slow the economy — or worse. 

The past 10 U.S. recessions, for example, have taken place during or right after a recent Fed cycle of raising rates, according to research by Jefferies LLC.

Adding tinder to the fire, the U.S. economy contracted in the first quarter for the first time since the onset of the pandemic. Additionally, gross domestic product, the official scorecard for the economy, could shrink again in the second quarter. 

Rarely has GDP shrunk for two quarters in a row without a recession being declared. The only time in U.S. history that happened was in 1947.
…
Yet an economy is far more complex than just headline GDP, analysts caution. 

The group of prestigious economists responsible for declaring official recessions takes into account six major factors, such as the health of the labor market as well as household income and spending.

By those measures, the U.S. is definitely not in a recession. Far from it.

Posted in Economics, Employment, National Real Estate | 64 Comments

Get used to it

Posted on July 19, 2022 by grim

From the Record:

‘The new normal’? In NJ, higher prices may be here to stay, say economists

With prices rising at their fastest in more than four decades, the question is on the mind of every driver, homeowner, shopper and saver in New Jersey: Where will it end?

In the Garden State, gas prices have spiked 44% in the past year. The cost of new car in the New York Metro Area jumped 16% in June from a year earlier, according to the U.S. Labor Department. Meat, chicken, fish and eggs climbed 10%. Housing costs were up 4%. Economists expect the pain to drag on at least through the end of the year. Volatile energy and food prices may come back down, but some of the eye-watering increases are likely here to stay.

Eventually, employers may be forced to hike wages, increasing individual purchasing power to take some of the edge off of inflation. But it’s looking more and more likely, economists told us, that any “relief” will be triggered by a recession that dries up demand and forces businesses to recalibrate.

“Unless the economy really goes in the tank, I don’t think businesses will be inclined to lower the prices,” said Robert Scott, an economist with Monmouth University. How did we get into this mess? How do we get out of it? Here’s what a sample of local and national economic experts told The USA Today Network in New Jersey:

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 68 Comments

Where the money is

Posted on July 18, 2022 by grim

From NJ94.3:

3 New Jersey Counties Are Among The Richest In America

We all know there is a lot of money to be found in New Jersey. As a matter of fact, the Garden State is home to three of the fifteen richest counties in the entire country.

While most of us are just worried about paying the bills and filling up our gas tanks, others have a little more financial flexibility. And in some cases, much more flexibility.

No New Jersey counties made the top 10 richest counties in the nation, according to Daily Mail, but we managed to log in three counties in the top 15, and that is pretty impressive.

So where is all this Garden State money? Which counties are home to some of the richest people in America? Well, if you’re in South Jersey, don’t expect to see your county on this list.

All of the New Jersey counties that made the list are central or northern New Jersey counties.

Somerset County comes in at #15 with the average resident bringing home over $116,000 a year, and it’s a good thing because the average property prices are almost $530,000.

Morris County is another rich New Jersey county. It’s the 14th richest county in the United States. Each resident pulls in $117,000 annually.

Hunterdon County. This is apparently the richest county in New Jersey and the 13th richest in America. The average resident brings home nearly $118,000 a year. Not too shabby.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 124 Comments

July Beige Book

Posted on July 15, 2022 by grim

From the Federal Reserve:

Beige Book – July 2022

Federal Reserve Bank of New York

Summary of Economic Activity
Economic growth in the Second District slowed to a crawl in the latest reporting period, as demand from households and businesses weakened amidst ongoing labor shortages, supply backlogs, and elevated Covid levels. Business optimism about the near-term outlook has also eroded further. Businesses continued to report widespread increases in selling prices, input prices, and wages, as well as ongoing difficulty obtaining necessary supplies. Despite severe labor shortages and high turnover, businesses have continued to add workers and plan to continue doing so in the second half of the year. Both manufacturing activity and consumer spending have been flat in recent weeks, while tourism activity has accelerated. There were pronounced signs of easing in the home sales market, whereas the rental market was increasingly robust. Commercial real estate markets were mixed but generally steady. Construction activity has picked up, with a good deal of multifamily residential development in progress. Finance-sector contacts reported some weakening in activity, while regional banks reported widespread declines in loan demand and refinancing activity, as well as tighter credit standards and steady delinquencies.

Labor Markets
Businesses continued to report widespread labor shortages, restraining both new hiring and retention, though one employment agency noted that workers have become more reluctant to change jobs. Particularly acute labor shortages were reported in technology and healthcare occupations. Still, a sizable proportion of businesses indicated that they continue to add staff—particularly in the wholesale trade and information sectors, as well as in transportation and professional & business services. One contact noted increasing job openings for call centers. Firms in all major industry sectors except finance plan to add staff in the second half of this year.

Businesses continued to note widespread wage increases and anticipated further increases in the months ahead. One employment agency noted that more employees are using counter-offers to raise their salaries in their current jobs. Wage gains have been most pronounced in the construction, transportation, and warehousing sectors.

Real Estate and Construction
Housing markets have been mixed since the last report, with the rental market continuing to strengthen but the sales market weakening noticeably. Both in New York City and across the metropolitan region, there has been a steady and pronounced decline in signed contracts in both May and June, going against normal seasonal trends. A leading local real estate authority attributed this drop-off in sales to a combination of low affordability, rising mortgage rates, and increased uncertainty. There has also been a rise in the inventory of available homes—though it is still quite low—but not a reduction in prices thus far. Real estate contacts in upstate New York continued to characterize the market as strong, though less so than in recent months—for instance, bidding wars still occur but with fewer bidders competing and some sellers have lowered their asking prices.

In contrast, residential rental markets have strengthened noticeably, with substantial escalation in rents, low vacancy rates, and brisk leasing activity. In New York City, rents rose sharply during the 2nd quarter, setting new records, and rental vacancy rates are at a 20-year low. Rents have also risen sharply in upstate New York. With rents rebounding to well above pre-pandemic levels in New York City and elsewhere, affordability has been a widespread and growing concern.

Commercial real estate markets have been mixed since the last report. Office markets across the District were steady to slightly weaker, with vacancy rates edging up in Manhattan and the Lower Hudson Valley but little changed elsewhere. Office rents were flat to up slightly and close to pre-pandemic levels, except in Manhattan. The industrial market has remained firm, with vacancy rates leveling off but rents continuing to rise briskly. The market for retail space has remained sluggish.

Construction activity has been mixed but picked up somewhat overall. Nonresidential construction starts have remained exceptionally low, whereas multifamily residential construction starts have increased across most of the District, with the notable exception of Manhattan—though even there a sizable volume of construction is still in progress.

Posted in Demographics, Economics, Employment, New Development, New Jersey Real Estate | 122 Comments

About your wage increase…

Posted on July 14, 2022 by grim

From Bloomberg:

Rents in US Rise at Fastest Pace Since 1986, Buoying Inflation

An index measuring rent of a primary residence was 0.8% higher in June than the month before, an acceleration from the 0.6% increase recorded in May, according to the Labor Department’s report on consumer prices published Wednesday. In the 12 months through June, rents were up 5.8%.

Those costs are soaring across the country as would-be homebuyers get priced out by the fastest-rising mortgage rates in decades and slide back into the overcrowded rental market. But rent growth may be peaking as affordability concerns mount, and a surge in construction of new units is poised to start adding to the available inventory.

The Labor Department measure tends to lag behind other estimates, so it is likely that rent increases will contribute to rising inflation in the consumer price index through the rest of this year, according to Mark Zandi, chief economist of Moody’s Analytics.

“The big increase in CPI rents is catch-up with the consistent double-digit growth in market rents,” Zandi said. “The good news is that market rents appear to be topping out, as renters are not able to afford the higher rents and are balking. More rental supply is also coming, although this will take a year or two to have a meaningful impact on market rents.”

Nearly 836,000 multifamily units are under construction, the most since 1973, according to Jay Parsons, chief economist at RealPage. But most new construction targets higher-income tenants and not the lower end, where supply shortages are most extreme, he said.

Wage growth continues to outpace rent increases, but that gap is rapidly closing.

“Affordability is not a major headwind yet in the market-rate rental sector, but it could quickly become one if wage growth slows,” Parsons said.

Rents, along with a category known as owners’ equivalent rent that often moves in tandem, account for more than 30% of the consumer price index, giving them outsize weight in overall inflation trends. Given the close ties between rents and wages, the accelerating pace of increases will keep Federal Reserve officials on an aggressive tightening path.

Posted in General | 81 Comments

Doesn’t this mean there won’t be a recession?

Posted on July 13, 2022 by grim

From CNBC:

70% of Americans think a recession is coming: Here’s what they are doing to prepare

Experts are weighing the odds as to how likely a recession is and how fast it could come upon us.

Most Americans — 70% — already believe an economic downturn is on its way, according to a new survey from MagnifyMoney. The online survey was conducted between June 10 and 14 and included 2,082 respondents.

A recession is defined as a significant economic decline that lasts more than a few months.

The biggest recession warning sign, which 88% of respondents pointed to, is high inflation.

Respondents also reported seeing signs of an economic downturn in housing and rent prices, with 61%; rising interest rates, 56%; the stock market, 55%; declines in consumer spending, 42%; and rising unemployment, 36%.

Some of those perceptions may lean on how people feel about the economy, rather than hard numbers. While the U.S. economy still has bright spots — including a strong overall job market and rising wages — higher prices have raised Americans’ feelings of financial insecurity, according to Matt Schulz, chief credit analyst at LendingTree, which owns MagnifyMoney.

“When something as fundamental to people’s every day lives as gas prices and grocery bills goes sky high, it really has a huge impact on the way people look at things,” Schulz said.

Posted in Demographics, Economics, National Real Estate | 116 Comments

Like all the locals here I’ve had to sell my home, too proud to leave I work my fingers to the bone.

Posted on July 12, 2022 by grim

From the NYT:

The Shrinking of the Middle-Class Neighborhood

When Ashley Broadnax thinks of the East Nashville neighborhood she grew up in during the ’90s, the images that rush in have a modest, middle-class tinge.

After school, she and other neighborhood children bought snacks at the corner store and threw balls on the street as their parents returned home, some in uniform from blue-collar work, others from jobs as teachers or office workers. Neighbors chatted on porches and lawns of unassuming single-story homes. There were some poor families and a few wealthy ones, but more than a third of her neighbors made between $40,000 and $75,000 in today’s dollars — enough to live comfortably.

But by 2020, the income distribution had tilted so that half the families made $100,000 or more, census data shows. All across the neighborhood, the modest houses of Ms. Broadnax’s youth have been replaced by high-end homes known informally as “tall skinnies” that tower over the older homes that remain.

So when it was Ms. Broadnax’s turn to pay the rent, using her own middle-income salary as an educator, the cost was out of reach.

In some ways, the pattern reflects how wealthy Americans are choosing to live near other wealthy people, and how poorer Americans are struggling to get by.

But the pattern also indicates a broader trend of income inequality in the economy, as the population of families making more than $100,000 has grown much faster than other groups, even after adjusting for inflation, and the number of families earning less than $40,000 has increased at twice the rate of families in the middle.

Ms. Broadnax has become part of a great chase nationally for affordable housing. High rents in the city initially sent her to the more affordable Antioch neighborhood in 2011. But home prices nearly doubled there since 2018, so buying a home meant moving farther out to a suburban community called La Vergne.

“The same people that’s working in their city can’t afford to live in their city,” Ms. Broadnax said about Nashville.

Nationally, only half of American families living in metropolitan areas can say that their neighborhood income level is within 25 percent of the regional median. A generation ago, 62 percent of families lived in these middle-income neighborhoods.

Posted in Demographics, Economics, Employment, National Real Estate | 74 Comments

Work From (Rented) Home

Posted on July 11, 2022 by grim

From the NYT:

Renters Face Fiercest Competition in Florida and the Northeast

Demand for apartments in Florida has intensified, followed by markets in Pennsylvania and New Jersey, as Americans embrace remote work.

As pandemic restrictions ease and remote work becomes a permanent fixture, Americans continue to seek homes in communities with more relaxed lifestyles — particularly in Florida and the Northeast, home to the country’s most competitive markets for renters, according to a new analysis of real estate data.

The analysis, released in June by RentCafe, a division of the real estate software firm Yardi Systems, showed that Miami-Dade County, home to more than 20 miles of beaches, was the most competitive area for renters during the first four months of 2022. Also among the Top 10: Harrisburg, Pa.; Orlando, Fla.; North and Central Jersey, Southwest Florida, Grand Rapids, Mich.; Rochester, N.Y., and Milwaukee.

The rental trend has been fueled in part by stubbornly high house prices and rising mortgage rates, which are pushing would-be buyers into an already overheated rental market, the report said. To determine the hottest markets so far this year, researchers considered five metrics: average vacant days, occupancy levels, prospective renters competing for listings, lease renewal rates, and the volume of new apartments built in the first four months of the year.

Posted in Demographics, Economics, Employment, National Real Estate | 69 Comments

Which states are leading the recession?

Posted on July 9, 2022 by grim

From the BEA:

Gross Domestic Product by State, 1st Quarter 2022

Posted in Economics, National Real Estate | 58 Comments