Is the economic outlook for New Jersey as bad as we think?
What’s in store for the New Jersey economy for the rest of this year?
It turns out nobody is quite sure because right now there’s a hodgepodge of different economic signals.
Rutgers University economist James Hughes said as is often the case, “we have really conflicting indicators, where some are improving, some are still deteriorating.”
While prices for many products continue to push higher, retail sales actually rose 1% last month, which indicates consumers are still spending money.
Inflation is bad but the job market remains good
Hughes said on the downside the rate of inflation is still the worst it has been in decades, but at the same time “the labor market appears to still be very strong, we’ve had good job growth in New Jersey, we still have a tremendous number of unfilled jobs, we still see help wanted signs throughout the Garden State.”
Hughes said if the housing market gets negatively affected by rising interest rates, “people are going to feel that their wealth position is eroding. Inflation has already reduced their wages, it’s reduced their buying power and the like.”
The worse ever?
He said another negative indicator is in the most recent Consumer Sentiment Index put out by the University of Michigan, “most people suggest 2022 is the worst year ever in the economy, I think that’s a little bit exaggerated.”
In the midst of this drop in optimism Hughes pointed out many Jersey families are still in relatively good shape.
Money to spare, for now
“They still have built up savings that accumulated during 20 and 21, when we had federal rescue funds bolster the position of households,” he said.
He said the fact that we have falling gas prices is another positive sign for consumers, although the reason they are going down is that people are driving less.
So what do we think happens next?
Lots of uncertainty
Hughes said ongoing shutdowns in China because of COVID and the continuing Russian invasion of Ukraine have contributed to a fairly high degree of instability, around the world and right here in Jersey.
“I think all we can say is it’s highly uncertain but we’re not going to slide into the economic abyss, the economy is still generally strong.”
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