Why is New Jersey still struggling to rev up its economy?
According to historical trends, we’re now overdue for another economic downturn, even though many New Jerseyans may feel like we haven’t really recovered from the last recession.
James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, points out the Great Recession technically ended in June 2009, which means we are now in the 87th month of the recovery, the fourth-longest economic expansion in American history.
“Based upon age, the expansion seems old, but that doesn’t mean it’s going to end anytime soon,” he said.
“Expansions rarely die of old age," he explained. "They’re usually caused by the Federal Reserve raising interest rates sharply, or a major external event such as an energy or oil shock.”
Another important point to keep in mind, he said, is the economic recovery we’re in now is different than previous expansions.
“Previous recessions were mainly blue-collar recessions with white-collar losses very minimal. But the 2007 to 2009 downturn was our first white-collar recession,” he said. “Fifty percent of all the jobs lost were white collar jobs and that’s the first time we had that experience, so we’re recovering from a different recession.”
Across the country, said Hughes, close to 9 million private sector jobs were lost, and it’s taken a very long time to recover those jobs
At the same time, he says incomes haven’t returned yet to their pre-recession levels, “so people may be employed but they don’t see themselves advancing in terms of their economic well being.”
Hughes noted Superstorm Sandy and the resizing of Atlantic City’s casinos hurt the state’s economic recovery. Then last year we had a very positive move with more than 80,000 private sector jobs gained.
“This year we seem to be stumbling again, with about 10 to 11,000 jobs gained during the first half of the year, so we are lagging the nation,” he said. “We are adjusting to really a period when job growth is being concentrated in places like New York City, Boston and the like.’
In other words, economic activity is revving up in major urban areas, not the suburbs.
Hughes explained job growth in states like New Jersey has slowed because we’ve become much more technologically efficient.
“We have much more sophisticated programming, much more sophisticated information technology, so those sort of middle-skilled white-collared jobs aren’t being created,” he said. “Most new office jobs today are creative-type jobs and Millennials are the ones filling those new jobs, but they want to be in places like Brooklyn and Chelsea in New York City.”
Hughes pointed out it’s hard to predict what will happen to the Jersey economy between now and the start of 2017.
“We don’t really have a good handle on how we’ve really done so far this year cause the numbers have been jumping around and they’re gonna all be revised as we get to the end of the year,” he said.
Contact reporter David Matthau at David.Matthau@townsquaremedia.com.
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