New Jersey companies expect a recession to hit by 2021
New Jersey companies are getting skittish about the state’s business outlook, according to results from the New Jersey Business and Industry’s annual survey.
Expectations for the New Jersey economy heading into 2020 are at an 11-year low and more than half anticipate a recession next year or in 2021.
Michele Siekerka, the NJBIA’s president and chief executive officer, said the results reflect a business community that is very concerned. One of the questions invited open-ended comments – and while there are always colorful and emotional ones, there were many more this year than in the past.
“The overwhelming majority are negative, and there’s much more negativity than we’ve seen,” Siekerka said. “I’m here five years. This is probably the most negative in terms of comments that we’ve seen.”
Only 12% of respondents expect New Jersey’s economy to fare better in the first half of 2020 than in 2019, while 40% say it’ll do worse. The net outlook is the lowest since 2009, and the two-year net drop of 42 percentage points is the biggest since 2005 to 2007.
Views of the national economy are similar sliding, though remains healthier than for New Jersey’s. Thirty-two percent of respondents think things will be better in the first half of 2020, down 14 points from a year ago, and 25% say things will be worse.
Fifty-six percent anticipate a recession by 2021, though Siekerka contends that is in part because the economic expansion has been going on for so long, since 2009.
“People have been saying now for probably a year to 18 months we see a recession on the horizon, and we seem to keep overcoming it,” she said.
Sixty-two percent of businesses forecasting an economic slowdown said they’ll address it by reducing operational costs. Thirty-five percent say they will postpone hiring, and 32% will stall raises.
Businesses reported gains in sales, profits and purchases this year, at lower rates than in 2018.
The NJBIA’s annual business outlook survey has been conducted 61 times. For the first 59 years, health care costs were the number one concern. Siekerka said for the last two years, it has ranked third behind property taxes and the cost of doing business in New Jersey.
“Again, that’s a sign. New Jersey is not affordable,” Siekerka said.
New Jersey’s non-competitiveness is going in the wrong direction, she said.
“It’s one thing to rank last. It’s another thing to be an outlier. But it’s really, really challenging when you’re an extreme outlier,” Siekerka said.
Siekerka said the state government needs to hold off on new rules and regulations for a while.
“When I’m talking about the pause button, I’m talking about direct mandates on business,” Siekerka said. “So in other words a moratorium – like, ‘Hey, let’s cut a deal. For two years, you’re not going to throw another cost on New Jersey businesses.”