Governor Chris Christie insists the 'New Jersey Comeback' has begun. He stresses the word, 'begun.'

A new report issued by Well Fargo shows the comeback could take a while because in 2011, economic activity in the Garden State unexpectedly slipped into negative territory.

"New Jersey was one of seven states that had a negative output in 2011," explains Wells Fargo senior economist Anika Khan. "If we look at other neighboring states we see that New York and Pennsylvania both saw increases in their output."

Khan points to New Jersey's housing situation as the reason for the Garden State's slip. Real Gross Domestic Product (GDP) fell 0.5 percent with real estate, rentals, and leasing knocking off a 1.1 percentage points. The study says real estate, rentals and leasing have detracted from economic growth for the past three years, with the pace of decline accelerating.

If you could set aside the housing component, New Jersey's GDP was positive last year. It increased 0.6 percent year-over-year. Trade, information, durable-goods manufacturing, professional and business services and health care all showed improvement.

"I would say that overall momentum continues to improve (in New Jersey), but at a slower pace," explains Khan. Referring to last year, she says, "We think that this is really just a blip and that we should continue to see improvement in the state."

Following three years of declines, employment grew 0.11 percent in 2011 and is up 0.6 percent since the beginning of this year. New Jersey's coincident index, which is a more up-to-date monthly indicator of economic activity, showed gradual improvement in 2011. The measure shows overall economic activity has been in positive territory since late 2009 and has increased 3.8 percent over the past two and a half years. For these reasons Khan calls New Jersey's negative output, "a head-scratcher."

The study also looked at New Jersey's high level of debt and weak pension and other post-employment benefits (OPEB) funding, which led to all three rating agencies downgrading New Jersey's outstanding general obligation bonds last year, remain as pressing issues for the state.

In 2011, net tax-supported debt was about $34.97 billion, with New Jersey ranking third in the nation behind California and New York.