NJ economic outlook – Will prices keep spiking?
As we head into the second half of 2022, what is the economic outlook for New Jersey?
The state’s top economist said a number of variables are pulling us in many directions.
Rutgers University economist James Hughes said inflation is embedded for the time being, with energy and food prices still rising so don’t count on any sudden relief on the horizon.
“But there are some positives. Firms are still hiring. We’ve had strong job growth. We still have record numbers or close to record numbers of unfilled job openings,” Hughes said.
The NJ economy is strong now
Hughes pointed out the state’s economy "out-performed the nation in this expansion.”
Hughes said New Jersey has recovered about 95% of our job losses from the start of the pandemic, which is slightly better than the nation.
Despite the strength of New Jersey's economy, there are a lot of unknows facing the state and the nation. Hughes said once we get closer to the end of the year, starting around October, the picture gets a bit murkier.
“There are structural changes going on. The cheap money era is ending. We didn’t realize how good we’ve had it the past decade in terms of record low interest rates.”
He said there is also continued uncertainty about Ukraine, possible food shortages around the globe, lockdowns in China and a host of other issues – so predicting what will happen to the economy next fall and winter is extremely difficult.
We don’t have a clue
“There are too many variables, too many uncertainties. We like to say we’re in uncharted territory, but that’s a coward’s way out of saying we don’t really know. We don’t have a clue,” Hughes said.
One aspect to watch is slowed economic growth.
“It’s not quite the perfect economic storm yet but we can definitely say growth is slowing, but again there’s no certainties. You look at charts and the like – the best way I can describe it, growth continues until it doesn’t,” Hughes said.
He said it used to be that when we had two straight quarters of negative gross domestic product growth, experts would announce we were in a recession. However, Hughes said "that's sort of fallen out of favor now," and while the stock market has continued to drop for months, that doesn’t necessarily predict a recessionary period.