Rutgers Economist Sees Weak Long-term Job Growth, Rising Unemployment, Low Inflation for New Jersey; Garden State will Continue to Lose Information, Manufacturing Jobs
January 17, 2007
EDITOR’S NOTE: ATTENTION BUSINESS, ASSIGNMENT EDITORS, to arrange an interview with Nancy Mantell or other speakers, call Steve Manas, 732-991-7397.
New Brunswick, N.J. – After starting 2006 on pace to add more than 40,000 jobs, by year’s end New Jersey’s continuing economic slowdown produced only 34,600 jobs, a growth rate of less than 1 percent and a trend not likely to reverse itself any time soon.
Nancy Mantell, director of the Rutgers Economic Advisory Service (R/ECON), made that prediction during R/ECON’s semiannual subscriber conference, “The Housing Bubble – Is it Real in New Jersey?” today in New Brunswick. Joining Mantell was Jeffrey G. Otteau, president of the Otteau Appraisal Group Inc., a statewide real estate appraisal and consulting firm headquartered in East Brunswick, who presented, “2007 New Jersey Housing Forecast: Market Correction or Crash?” Economists James W. Hughes, dean, and Joseph J. Seneca, university professor, both from the Edward J. Bloustein School of Planning and Public Policy at Rutgers, The State University of New Jersey, joined the discussion.
Mantell said that New Jersey’s 0.9 percent nonagricultural job growth lagged behind the nation’s 1.4 percent growth rate. She anticipated that the state’s job growth rate would dip to 0.6 percent in 2007 and would average 0.9 percent yearly through the 2016 forecast period.
“Weak job growth is a concern, but so is the distribution of growth across industries. Nearly a quarter of our new jobs were in the public sector – clearly a problem when the state is trying to lower the tax burden on its residents,” Mantell observed. “Further, out of the private sector jobs most were in the relatively low-wage administrative support and food service industries, while such high-wage sectors as manufacturing and information continued to decline.”
She noted that since 1990, manufacturing employment in the state has declined at a rate of just over 3 percent annually, for a total loss of 200,000 jobs. Since 2000, the information industry has fared worse, losing jobs at an annual rate of more than 5 percent, or a total of 30,000 positions. Losses in both areas will continue at a slower rate throughout the forecast.
The number of high-wage construction jobs also will fall through 2016, R/ECON’s director predicted. “Construction gained jobs in the 1990s through 2005, but a slowdown in the residential real estate market will reverse that trend,” Mantell said. Those slowdowns will continue to elevate New Jersey’s unemployment rate, from an average 4.4 percent in 2005, to 5 percent in 2006, to an anticipated 5.5 percent this year. Mantell looks for a 5.3 percent annual average through 2016.
While growth in New Jersey’s total output of goods and services (the Real Gross State Product, which averaged as high as 3.1 percent in 2004 but only 2.3 percent last year), is predicted to average a modest 2.5 percent through the end of the forecast, Mantell offered some good news for Garden Staters. She sees healthy growth in the high-paying finance and transportation industries, and also in the four service sectors (professional/business, educational/health/social, leisure/hospitality, and other). The service groups will grow at rates averaging at least 1.2 percent a year through the forecast and will provide more than 70 percent of the state’s net new jobs during the next 10 years.
Mantell also foresees declines in both the state’s and nation’s inflation rates to around 2 percent the next several years, assuming that oil and housing prices will retreat from highs reached in mid-2006. The rapid rise in oil and natural gas costs following hurricanes Katrina and Rita, and supply concerns based on the political environment in various oil-producing nations, had produced an average annual inflation rate of around 4 percent from 2004 to 2006.
New Jerseyans also will benefit from increased personal income, although 2007’s anticipated 5 percent gain is less impressive than last year’s 6.7 percent average increase. Mantell expects income to rise by an average of 5.7 percent through the forecast.
R/ECON, offered by the Center for Urban Policy Research at the Bloustein School, provides its subscribers, including business and government agencies, comprehensive forecasting tools that enable them to plan their operations in line with expectations about the economic environment.
|Annual Percentage Growth|
|Real Gross State Product||3.1%||2.1%||2.3%||2.2%||2.5%|
Contact: Steve Manas
732-932-7084, ext. 612