THE Recovery IS UNDERWAY
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center for urban policy research ForeCaSt oF aPrIL 2012 New JerSey: tHe reCovery IS UNDERWAY Nancy H. Mantell, Ph.D. Michael L. Lahr, Ph.D. eXeCUtIve SUMMARY The April 2012 R/ECON™ forecast for New Jersey The speed of recovery in New Jersey continues to lag looks for growth in nonagricultural employment of that in the nation. Through February 2012 the U.S. 1.2 percent or 48,000 jobs in 2012. This is an above av- had regained 39 percent of the jobs lost during the erage rate as the economy comes decisively out of the recession, while New Jersey had regained only 21 recession, but the rate of growth will then slow as the percent. (See Chart 1.) In terms of gross output, New recovery/expansion progresses. Growth will continue Jersey lost 3.9 percent in 2009 and regained 60 percent through the forecast period at an average rate of 0.8 of it in 2010. The forecast indicates that the rest of the percent or 32,000 jobs per year. By the end of the pe- riod the employment level will be 144,000 jobs above loss and more was recovered in 2011. The loss in GDP the peak reached in 2007.The unemployment rate will for the U.S. was also more than recovered in 2010 and fall from its current level of 9 percent to 5.7 percent by 2011. 2022. At that level its will still be above pre-recession levels. New Jersey’s economy improved CHART 1: NEW JERSEY AND U.S. EMPLOYMENT INDICES slowly and steadily during most 2000 TO 2012 of 2011 and into early 2012. After 1.08 hitting bottom in January 2011 1.06 employment was up by 54,600 1.04 jobs in February 2012. The un- employment rate fell to 9 percent 1.02 in January and February 2012 1 from the recessionary peak of 9.9 `` percent reached in April 2010. 0.98 January 2000 = 1.0 There are still so many ongoing 0.96 Employment: N.J. problems in the U.S. and global Employment: U.S. 0.94 economies that we believe the 0.92 pace of recovery and expansion in 01 11 20 the state in this business cycle will 200001 200101 200201 200301 200401 200501 200601 200701 200801 200901 201001 201201 remain modest. Sources: www.wnjpin.state.nj.us and www.bis.go. © rutgers economic advisory service • center for urban policy research edward j. bloustein school of planning and public policy civic square • 33 livingston avenue new brunswick, new jersey 08901-1982 • telephone: (848) 932-2839 • fax: (732) 932-2363 R/ECON™ the full period was educational, health, CHART 2: NEW JERSEY PUbLIC AND PRIvate EMPLOYMENT INDICES 2000 TO 2012 and social services. (See Chart 3.) Between January 2010 and January 2011 the state 1.15 lost 14,700 jobs, with losses in the public sector and several private sectors nearly 1.10 balanced by a large gain in professional Private and business services. Since January 2011 Government 1.05 the only sector losing a substantial number of jobs has been information. 1.00 As has been the case in the past several R/ January 2000 = 1.0 ECON™ forecasts, the current forecast 0.95 indicates that growth in New Jersey will be so slow that the average number of jobs 0.90 01 in the state will not surpass the 2007 peak 11 20 200001 200101 200201 200301 200401 200501 200601 200701 200801 200901 201001 201201 until 2016. The U.S. will begin its job ex- Source: www.wnjpin.state.nj.us. pansion two years earlier—in 2014. Dur- ing the period from 2011 to 2022 we expect New Jersey relied on the public sector for job growth average annual employment gains of 0.8 percent or in the first decade of the century; however, since early 33,400 jobs in New Jersey. By the end of the forecast 2011 there has been a shift in that now almost all job period the state’s employment base will exceed the growth is in the private sector. As can be seen in Chart 2007 peak by 3.5 percent, or 144,000 jobs. We expect that during the recovery and expansion, employment 2, the number of private sector jobs barely changed in growth in the U.S. will continue to outperform that 2010, but it has risen 1.7 percent, or 54,900 jobs, since in New Jersey. (See Chart 4.) By the end of the fore- January 2011. cast period the nation’s employment base will exceed Between January 2008 and January 2011, the state had the peak reached in 2007 by 7.7 percent. Thus New a net job loss of 259,900. The only growth sector over Jersey’s share of the national job base will decline from its current 2.93 percent to 2.85 percent in CHART 3: CHANGE IN EMPLOYMENT IN NEW JERSEY 2022. JANUARY 2008 TO January 2012 The New Jersey unemployment rate 30.0 Change Jan. 2008 to Jan. 2009 Change Jan. 2009 to Jan. 2010 was lower than that of the U.S. through Change Jan. 2010 to Jan. 2011 20.0 Change Jan. 2011 to January 2012 much of the past decade, and this held true during most of the recession as well. 10.0 The state’s rate began to be persistently 0.0 above the national rate at the beginning of 2011. At that time workers in New Jersey -10.0 started to reenter the labor force in large Thousands of Jobs and Mining Information -20.0 and Utilities Leisure and Retail Trade Retail Government Construction Manufacturing Transportation Transportation numbers as the labor market seemed to Other Services Professional and Wholesale Trade Wholesale Financial Services Business Services Hospitality Services and Social Services Educational, Health, improve, but the jobs weren’t there yet for -30.0 them (See Chart 5.) Since December 2010 -40.0 46,900 workers have entered or reen- Source: www.wnjpin.state.nj.us, March 2012 tered the workforce, while the number of 2 APRIL 2012 2 CHART 4: CHANGE IN NEW JERSEY AND U.S. EMPLOYMENT CHART 5: NEW JERSEY AND U.S. UNEMPLOYMENT RATES 1990 TO 2022 2000 TO 2012 4.0% 12.0 3.0% 10.0 2.0% Unemployment Rate: N.J. 8.0 1.0% Unemployment Rate: U.S. 0.0% 6.0 -1.0% 4.0 -2.0% New Jersey Growth Rate 2.0 Annual Percent Change (%) -3.0% U.S. Growth Rate Unemployment Rate (%) -4.0% 0.0 101 107 -5.0% 201 201 200001 200007 200101 200107 200201 200207 200301 200307 200401 200407 200501 200507 200601 200607 200701 200707 200801 200807 200901 200907 201001 201007 201201 201207 Sources: Global Insight U.S. Forecast, March 2012, and R/ECON™April 2012. Sources: www.nj.gov/labor/ira and www.bis.gov, March 2012 unemployed has fallen by 15,200, bringing the unem- The state added 378,000 residents between 2000 and ployment rate to 9 percent in January and February 2010, growing at an average annual rate of 0.44 percent. 2012. New Jersey’s unemployment rate is expected to This was just over half as fast as population growth in decline slowly as the state’s economy recovers, reach- the 1980s and was only half as fast as national popu- ing 5.7 percent in 2022 when the U.S. rate reaches 5.5 lation growth. Population growth will average 0.6 per- percent. cent a year from 2010 to 2022, compared to 1 percent a Between 2010 and 2022, output in New Jersey will year for the U.S. The state will add more than 600,000 expand at an average rate of 1.8 percent a year com- residents in that period. As a result, New Jersey’s popu- pared to the average rate of 2.5 percent a year expect- lation will top 9 million in 2015 and 9.4 million in 2022. ed nationwide. The differential is due to the relatively Since New Jersey’s population growth will continue to higher costs of living and doing business in New be slower than growth nationwide, the state’s share of Jersey, as well as the state’s lower rate of population U.S. population will fall from the current 2.8 percent to growth. (See table 1.) 2.7 percent in 2022. Thus, the state’s share of national New Jersey’s consumer prices rose 2.7 percent in 2011 employment will remain slightly higher than its share because of high inflation rates in agricultural and oil of the national population. prices in the early part of the year. The rate of inflation table 1 SUMMARY oF New JerSey eCoNoMIC ForeCaSt will be much slower in the forecast period, at only 2 2012 percent a year from 2011 to 2022. to 2011 2012 2022 Personal income rose an estimated 4 percent in 2011 Annual Percentage Growth Nonagricultural Employment 0.1% 1.2% 0.8% as the state came out of the recession. It will rise at an Real Gross State Product 3.2% 1.4% 1.8% average rate of 4.1 percent a year over the forecast pe- Personal Income 4.0% 3.6% 4.1% riod, somewhat lower than the 4.5 percent growth ex- Population 0.4% 0.5% 0.6% Consumer Prices 2.7% 2.0% 2.0% pected for the U.S. On a real per capita basis, income Percentage Unemployment Rate (average) 9.3% 8.6% 6.1% will grow nearly identically in the state and nation at about 1.5 percent per annum.