Experts forecast New Jersey’s fiscal climate
Believe it or not, New Jersey’s economy is growing — slowly, but surely — but it still lags behind the nation and other states.
Economic experts discussed the state’s recession status and their predictions for growth yesterday at the Rutgers Economic Advisory Service semiannual subscriber conference in the Civic Square Building in downtown New Brunswick.
“The economy is really growing this time, still slowly, but we do expect an increase in jobs in the state,” said Nancy Mantell, director of the Rutgers Economic Advisory Service.
She forecasts an additional 48,000 jobs to be added to the state in 2012, as well as a drop in the unemployment rate to 8.6 percent from the current 9 percent.
Mantell also predicts the state’s unemployment rate, which has hovered consistently around the national rate, to drop further to 5.7 percent — above pre-recession levels — by 2022.
Most of the new jobs in New Jersey will be in the private sector, and government jobs will remain flat after being slashed over the last couple of years, she said.
Most industries should see this growth, including construction and labor, which were hit hard during the 2008 start of the recession. But the manufacturing and information sectors remain among the few exceptions, Mantell said.
Though there was a modest employment gain in 2011, the increases will be greater through 2022, the end of the forecast period, Mantell said.
“We’re not looking for the economy to recover to its pre-recession peak until about 2016,” she said.
But compared to the rest of the nation, New Jersey is lagging in economic expansion. The United States, which started recovery from the recession about one year earlier, compared to New Jersey, is regaining about twice the percentage of jobs lost, Mantell said.
“The [U.S.] economy is expected to add jobs at a rate of about 1.1 percent over the forecast period,” Mantell said, which could result in around 1 million jobs per year in the service sector.
There will also likely be a continual drop in the national unemployment rate. It peaked around 10 percent in 2009 but fell to 8.2 percent in March, she said.
New Jersey is also last against other states in the region, Mantell said, mostly because of a lack of increase in new government jobs, which other nearby states have started to recover.
“[New Jersey] is at the bottom of the barrel. There are 11 states lower than New Jersey in terms of growth in the last year or two,” she said.
Karl Case, founding partner of the real estate research firm Fiserv Case Shiller Weiss, Inc., discussed the current climate for buying and selling houses in New Jersey.
“People bidding are lowballing, people selling are highballing and there’s no agreements that get reached,” said Case, president of the Boston Economic Club. “The market goes flat, inventory builds. When inventory gets high enough, transactions just virtually fade away. Then what happens is, there’s no production and no sales.”
Case said today’s economy has not improved enough to make the market favorable for sellers.
“This is a very painful episode of our economic history,” he said.
Subbing in for Lt. Gov. Kim Guadagno at the conference was Caren Franzini, chief executive officer of the New Jersey Economic Development Authority, which acts as the state’s bank.
Franzini emphasized the state’s efforts to have both small and big businesses to grow in state.
For example, Guadagno was very instrumental in her efforts to have Schar, a small Italian company that produces gluten-free products, set up headquarters in New Jersey.
Schar originally worked at the Rutgers Food Innovation Center in South Jersey to practice producing in the United States, but started looking for a building of its own in Pennsylvania.
“We were out of our minds. How could you possibly go to Pennsylvania when you were at Rutgers Food Innovation Center?” Franzini said. “So the head of the company came here to meet with the Lt. Governor, and you can’t say no to her after you leave a room with her.”
Without any incentives, Schar agreed to stay in New Jersey, Franzini said. The building will open up in June in Logan Township.
The government is also trying to stimulate job growth and redevelop the New Brunswick community with the Gateway Transit Village, Franzini said.
The $326 million project will include The Fresh Grocer supermarket, a fitness center and residential and commercial units. It will create 450 permanent jobs along with 3,000 construction jobs, she said.
“[It’s] really encouraging people to work, and live, and have fun in downtown New Brunswick,” Franzini said.