NJ’s Economic Outlook Cautiously Optimistic [AUDIO]
After four years of a mostly meager results, New Jersey’s economic recovery gained considerable momentum during the first half of 2013.
Hiring picked up, home sales and apartment leasing increased, and the state’s unemployment rate fell steadily. That’s according to a new Well Fargo NJ Economic Outlook report which also suggests the recent improvement in labor market conditions may prove hard to sustain.
“For the last few months, (New Jersey’s) year-over-year employment growth has actually outpaced the nation’s,” says Wells Fargo economist Michael Wolf. “That’s the good news. The worry though is that in New Jersey perhaps some of this is due to Hurricane Sandy. It’s going to take some time to see if those changes in the employment numbers are here to stay or if that’s going to, sort of goi away at some point.”
The state’s unemployment rate has fallen 0.9 percentage points over the past year to 8.7 percent. Repairs and rebuilding efforts following Superstorm Sandy are clearly adding to recent gains, creating jobs in construction, building products and miscellaneous services. Sandy has forced residents to consume more and rebuild at a time when consumption and construction likely would have been more modest.
“I think the takeaway is cautious optimism,” says Wolf. “We should be pretty happy that New Jersey is catching up, but it’s this takeaway of, ‘Is this permanent?'”
There is unquestionably good news in the report. New Jersey is also seeing more fundamental improvements. Vital sectors, including the state’s large healthcare, life sciences and logistics industries are growing again. Manufacturing activity is also firming up, and the most recent data from the New York and Philadelphia Federal Reserve Bank surveys suggest that activity will pick up further in coming months.
Overall economic growth remains below trend in both the nation and New Jersey. Below trend growth is evident in most key economic measures, including real Gross Domestic Product (GDP) by state, which rose just 1.3 percent in New Jersey during 2012, following a 1.2 percent gain in 2011. The U.S. GDP by state rose 2.5 percent in 2012, following a 1.6 percent rise the prior year.