Friday, October 30, 2009

New Jersey Job Woes to Persist to 2019, Rutgers Says

 Oct. 30 (Bloomberg) -- New Jersey, whose jobless rate is at a 32-year high, will take a decade to get back to pre-recession employment levels, according to economists at Rutgers University.

The most densely populated U.S. state will take until 2019 before the number of people in work surpasses the 2007 peak, said Nancy Mantell, director of the Rutgers Economic Advisory Service.

“The country, in contrast, will begin job expansion three years earlier,” Mantell said in a statement yesterday. “By 2019 it will have 7.7 percent more jobs than at the previous peak.”

New Jersey entered recession in January 2008, one month after the U.S., and has lost 161,300 jobs, or 4 percent of its employment base, Mantell said.

The state shed jobs at a rate comparable with the national figure during the first year of the worst economic crisis since the 1930s. In 2009, the pace slowed to 1.8 percent, compared with 2.9 percent nationally.

The New Jersey jobless rate was 9.8 percent in September, up from 4.5 in December 2007, according to data compiled by the State Department of Labor and Workforce Development. The national rate is also 9.8 percent. New Jersey currently has 3.9 million non-farm jobs, according to state figures. In December 2007 it had a record-high 4.1 million such posts.

Slower Income Growth

Income growth in New Jersey will slow to less than 1.5 percent this year as the recession persists, after which it will increase by 4.2 percent annually through 2019, Mantell said.

Moody’s Investors Service lowered its credit outlook on $31 billion of New Jersey debt to negative from stable in August, citing the economic problems and budgetary constraints.

The nonpartisan Office of Legislative Services projects the state will confront a deficit of as much as $8 billion next year as rising unemployment and damped consumer spending depress tax receipts. The revenue gap is more than 25 percent of the $29 billion budget enacted by Governor Jon Corzine, the former co- chairman of Goldman Sachs & Co., in June.

Tax and fee collections for the quarter ended Sept. 30 fell $190 million, or 3.1 percent, below estimates, Treasurer David Rousseau said. Corzine ordered $200 million in cuts and directed his cabinet members to identify another $200 million in reductions.

In that spending plan, Corzine’s administration predicted revenue would drop more than 1 percent during the fiscal year ending June 30 from the previous 12-month period.

The only industries that experienced growth during the recession were education, health and “other services,” according to Mantell at Rutgers. Losses have been focused in manufacturing, construction and business services.

“The professional and business services sector will turn around during the recovery and will be, as it was during the past decade, a strong contributor to growth,” Mantell said.

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