After lagging the rest of the country throughout most of this recovery, New Jersey’s economy has gained considerable traction over the past year, according to a report by Wells Fargo Securities. The improvement is most evident in the labor market, with nonfarm employment growth strengthening and the unemployment rate slowly edging down to 5.2 percent. While the progress is notable, the Garden State continues to face a number of challenges, including a mountain of home foreclosures and a fiscal situation that rivals just about any other large state. Taxpayers continue to leave the state, with domestic migration well into negative territory. Still, amid these challenges, the improvement in the job market is noteworthy and likely signals broader gains in underlying economic conditions.
New Jersey’s economy expanded 1.8 percent in 2015, which was a marked acceleration from the prior two years but still lagged national real GDP growth. In the first quarter of 2016, however, New Jersey posted 2.7 percent year over year real GDP growth, besting the nation’s 2.1 percent over the same period. Moreover, New Jersey’s job growth accelerated during the past year, particularly relative to the nation.
New Jersey’s location in the heart of the Northeast Corridor is one of its greatest assets. The region is home to numerous bedroom communities for large employment centers and its economy benefits from income earned in other states and spent within New Jersey’s borders. Proximity to the large and relatively wealthy population in the Northeast supports a large logistics and distribution sector, which continues to flourish with an influx of e-commerce ventures. Jersey City and Hoboken have been steadily attracting residents and businesses from Manhattan, touting lower real estate costs and an attractive quality of life with easy public transit into the city. The interplay between New York City and Northern New Jersey is also fueling an infrastructure spending boom on bridges and improved rail lines that will eventually pump billions of dollars into the local economy and improve mobility within the region.
—By Wells Fargo Senior Economist Mark Vitner and Wells Fargo Economist Jamie Feik