Grim Portrait of Recovery at New Jersey Economic Summit
More than two years after the official end to the recession, the Garden State is still struggling.
Slow, steady, and grinding: That's the read on the recovery offered by economists gathered at yesterday's Garden State Economic Forum.
It may take the state four years to get back on track, said Loretta Mester, director of research at the Federal Reserve Bank in Philadelphia.
"There is pain here,” she said of New Jersey’s high unemployment rate.
The economists who took the stage Monday presented data to help shape public policy on jobs, taxes, and spending at a time when economic growth is not expected to rise above 3 percent. Despite overall high unemployment, however, patterns emerge when the data is analyzed, including sectors where there are jobs, especially for workers with advanced degrees.
The state’s chief economist Charles Steindel also presented an analysis and survey that supported the governor’s position that high taxes are driving away New Jersey’s wealthy.
The forum was organized by the state Department of Treasury as New Jersey grapples with the longest, steepest decline since World War II. Two and half years after the official end of the recession, “this is unlike any recovery we have ever seen,” said forecaster Joel L. Naroff, president of Naroff Economic Advisors, a strategic economic consulting firm.
Naroff dismissed the idea that housing would lead the economic recovery, as it often does.
"When you build so many additional homes than are needed and you have such a huge problem with distressed homes and foreclosures, the idea that the housing sector could rebound very quickly is just nonsensical,” Naroff said.
The financial meltdown further prevented a full recovery from taking off. “The financial sector is getting better," Naroff said, "but is not strong yet, and housing is a long way off.”
New Jersey's jobless rate is still dismal. The unemployment rate is slightly higher than the national average at 9.2 percent, with 417,979 people out of work in September. The percentage is highest for young, black males without high school degrees, said Aaron Fisher, an assistant commissioner at the state Department of Labor and Workforce Development.
The jobless rate is highest in Newark, Camden, and Passaic and Hudson counties, and government jobs at both state and local levels have been hard hit.
There’s some encouraging news in the unemployment reports. Education matters. Just 3 percent of workers with post-graduate degrees are jobless. And the unemployed haven’t given up. In the past three months, 34,000 out-of-work residents found new jobs, Fisher said.
Most encouraging, according to Erica Groshen, an economist with the Federal Reserve in New York, is that despite the slow, overall growth, industries have expanded.
Groshen has studied the “churning” of old vs. new jobs in the workforce. Old jobs are similar to a worker’s pervious job and require little or no training to get back to work. New jobs are positions created in another industry, someplace where jobs are growing, like healthcare and education, and require retraining and schooling. New jobs take longer to find, but create opportunities that show how “the economy adjusts to changes in technology,” she said.
Old jobs are rebounding more quickly than newly created positions, especially in science, administrative support, retail, and finance and insurance, she said. “On balance, this is good news for New Jersey, because it means workers can get back to work more quickly.
But there is a downside to the old jobs: They are disappearing in manufacturing, construction, and real estate, replaced in part by automation and exports.