(The Center Square) – A lot of the fundamentals remain "OK" for expansion in New Jersey, the state's former chief economist told The Center Square.
“I just looked at the state tax report for July this morning. And retail sales tax revenue was up nearly 10% from last July. Some of that's inflation, of course, but it still is a pretty good number,” said Charles Steindel, an analyst for the research and educational think tank The Garden State Initiative.
The labor market remains strong in New Jersey and across the nation, he said. Hundreds of thousands of jobs are added each month nationwide, with a new high set in July.
“The Atlantic City metropolitan area has been consistently leading the nation in 12-month job gains over every metro area in the nation,” he said.
The jobs numbers were very low, which meant they were coming off a very steep bottom, he said, but they’ve shown considerable improvement.
Some recovery was seen in manufacturing.
“With housing falling off, construction gains have sort of stalled out,” he said.
A lot of the jobs lost in 2020 were disproportionately low-wage jobs in leisure and hospitality, and in health care.
“That explains why state tax revenue held up so strongly, even though we had this enormous punch in jobs,” Steindel said.
The people paying most of the taxes were in higher-wage jobs, which didn’t have as many losses. But he said the state should feel good that those jobs are coming back and people are getting back to work in those areas.
Unemployment claims are examined like the canary in the coal mine, but not much is happening with them.
“They're a tad higher than they were a couple of months ago, but they've historically remained at very low levels,” he said.
In terms of the state economy relative to the rest of the nation, New Jersey is doing pretty well, he said. The Federal Reserve Bank of Philadelphia’s monthly indicator of state economies, recently issued, said in its index for New Jersey that its growth exceeds the national rate.
Gas prices came down in the past two months. But increases in food costs that drain consumer purchasing power could hurt things. There is risk of falling into a recession – whether it has already happened is subject of debate – and interest rate hikes could lay their toll, Steindel said. He doesn’t think a recession would be as deep as those in 2008 and 2020, but he doesn’t deny it could happen.
“The stock market retreat and shivers suggest certainly people in Wall Street are concerned about that,” Steindel said.
Some states are doing a lot better, including Texas, Florida, Georgia and California, he said. In general, New Jersey has been doing considerably better than New York.
Steindel doesn’t consider himself qualified to speak about what the state’s next great future growth area will be in the economy. He doesn’t expect it to be sports betting, which has done well in the past few years. But now surrounding states are competing in that sector.
“You're not going to have people walk or walk halfway across the George Washington Bridge this season to place a bet on the football, NFL games,” he said. “That's not going to happen, we're going to lose that.”