New Jersey sees some improvement in wealth index

A measure of New Jersey economic progress shows improvement, but the state's wealth index is still not back to where it was before the recession hit in 2007.  

Andy Kapyrin, the director of research, a partner and a chartered financial analyst with RegentAtlantic in Morristown says home prices are increasing, stock returns on Jersey companies are rising, as well as employment and income levels.

"What we are seeing is a broadening is what's improving the wealth," Kapyrin said. "The single biggest piece of good news is actually the level of the index."

According to Kapyrin, the index can be anywhere from zero to 100, with 100 being the best. According to Kapyrin, today, the firm's wealth index is is at 48.

"You know, if this were school, and you were getting 48 out of 100, you would say that is a pretty bad grade, that's an F," he said.

However, Karyrin said, the 48 is an average level, and getting back to average means we're back to normal.

According to Kapyrin, there are four things that go into the index: home prices, the returns of stocks for companies based in New Jersey, employment levels and income levels. All four of those things drive the index.

"One year ago, we were above 40, but most of the return was driven by stock prices.  Now that's great if you own Johnson & Johnson or Merck (stocks), if you are one of the executives with big option plans from one of those companies.  But it doensn't really help the little guy," he said. "What we are seeing is a broadening of what is improving the wealth, the health of the wealth in New Jersey."

Kapyrin also said home prices are starting to go rise.

"Over the course of the past 12 months or so we have had a greater than 3 percent increase in New Jersey home prices. That is going to help. Also, we are starting to see a lot of income growth," Kapyrin said. "Over the past 12 months, the CPI (consumer price index) is actually down, while income levels are up over 3 percent. That is really going to help people feel like they have a little bit of extra change in their pocket, start to feel more confident, start to buy homes if they haven't and do other things of that nature."

However, Kapyrin said, we are still pretty far behind where we were in 2007, before the great recession, "and one of the reasons that we are struggling is we are not growing like the rest of the country is. Our unemployment rate is higher than the rest of the country."

He said there are less people employed in the state in total, but some of that has to do with our shrinking population. In New Jersey, we have 100,000 fewer workers than we did in the year 2007. However, New jersey is no longer a rapidly-growing state in terms of population .