Reduced government spending in New Jersey will continue for at least two years, Naroff said today at an economic forum in Trenton organized by the state treasury department.
While New Jersey has a housing surplus, it “has not had the default crisis seen elsewhere,” Naroff said. With residents struggling to sell their homes, they have less flexibility to head to states such as Florida, where the cost of living is lower, he said.
“If you can’t sell your house, you can’t move,” he said. “Expect slowly improving economic and revenue growth, but not any surge coming from income, sales or corporate taxes. This is a slow population-growth state. We’re slowing the ’out’ migration.”
New Jersey’s economy was ranked the third-worst performing among U.S. states in the year through June 30, according to the Bloomberg Economic Evaluation of States Index, which uses data on employment, income, real estate, taxes and local stocks to track the direction of state economies.
The state’s economic recovery is lagging behidn the nation, the three major credit-rating companies said when they each lowered New Jersey’s bond ranking by one level this year.
New Jersey has been “bumping the bottom” during the recovery, as it lags neighboring New York City in job creation since the end of the recession, said Erica Groshen, a vice president at the Federal Reserve Bank of New York.
While its jobless rate is higher than the U.S. figure, its 65.9 percent participation rate is above the national rate of about 64.2 percent, Groshen said. A higher participation rate indicates a more ready workforce, she said.
New Jersey’s unemployment rate was 9.2 percent in September, while the national rate was 9.1 percent.
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