By Tom Hester, Sr. for NewJerseyNewsroom.com
Two in five New Jerseyans (41 percent) say they are worse off than a year ago, a seven-point decline from 48 percent in January of 2011, and the lowest percentage measured since 2008, according to a quarterly consumer survey by Fairleigh Dickinson University’s Silberman College of Business made public Tuesday.
32 percent of New Jerseyans say that they are better off financially than they were last year, up seven points from a year ago, and the highest percentage measured since 2006.
Renters (60 percent) are more likely than those who own a home (43 percent) to believe their finances will be better this year.
These findings are seen across every income and age bracket, with the largest gain coming in the 18-29 age group, where 57 percent say they are better off than last year, up 19 points from the January 2011 figure. Those in the 0-$50,000 (44 percent) and $101,000-$150,000 (32 percent) income ranges both saw double digit declines (-11 and -18 points, respectively) in those saying they are worse off than a year ago.
Going forward, half (47 percent) believe they will be better off financially in the upcoming year; unchanged from January 2011. Fewer (19 percent) say they will be worse off in 2012 than they were in January 2011, an eight-point improvement from the January 2011. This is an indication things may be leveling off in the Garden State.
“The economy is definitely improving,” Sorin Tuluca, professor of finance at the Silberman College of Business, said. “What’s interesting is that consumers realize that the economic improvement does not mean that we will go back to the economy of the past. They are more realistic in assessing their economic prospects.”
The perceptions of business conditions in the state also have improved over one year ago, where 30 percent say business conditions are better, compared to only 25 percent in January 2011.
Those who think that business conditions have gotten worse declined by 10 points; from 56 percent in 2011 to 46 percent in 2012. Looking at the year ahead, New Jerseyans continue to be optimistic, as 54 percent say business conditions will improve, unchanged from 2011 (54 percent). Those saying business conditions will be worse declined from 26 percent to 21 percent.
“People are not necessarily more optimistic,” Tuluca said. “But they are definitely less pessimistic.”
Unemployment continues to be a factor in the state, with 63 percent of New Jerseyans saying they, or someone close to them has lost a job in the past year, essentially unchanged from 2011. Also, despite the general sense of overall economic improvement, the percentage of New Jerseyans “somewhat” or “very” concerned about losing their job in the upcoming year remains steady at 32 percent.
“While still moving slowly, employment is picking up,” Tuluca added. “In the past quarter, unemployment dropped by about 1 percent and this is reflected in the survey.”
Other key findings of the study:
* 32 percent say it is “somewhat difficult” or “very difficult” to make payments on their credit card, down from 35 percent in 2011.
* 58 percent are “very” worried about inflation.
* 25 percent are confident the next generation will live better than us. Renters (36 percent) are more confident than homeowners (21 percent).
* Given a windfall of $1,000, a plurality (49 percent) would use it to pay bills, and 12 percent would spend it, both unchanged from 2011. However, this year only 30 percent would save it, down from 36 percent a year ago. Renters (61 percent) are more likely than home owners (44 percent) to use the money to pay bills.
On the housing front, often a leading indicator of recovery, only 46 percent think prices will increase in value in 2012. This continues the downward trend from 49 percent in January 2011 and 56 percent in January 2010. Homeowners (16 percent) are more likely than renters (6 percent) to say housing prices will be flat in the upcoming 12 months.
The composite Index of New Jersey Consumer Intentions – what New Jersey consumers think they will do on a theoretical scale of 0 to 100 – is 41, up from 39 a year ago. The composite Index of New Jersey Performance – what consumers actually did in the past year – is 35, up from 31 a year ago and 28 in 2010.
“There are signs that the most important asset of many households, the house, has bottomed out in value,” Tuluca said. “This explains people’s caution in spending, refinancing or otherwise using home equity as a piggybank.”
Tuluca added, “One hopes that the biggest lesson learned in this crises, is not to borrow more than you can repay against your home.”
The telephone survey of 660 randomly selected adults throughout New Jersey who participate in their household’s financial decisions was conducted by Fairleigh Dickinson University’s PublicMind from Jan. 2 through Jan. 8 and has a margin of error of plus or minus 4 percent.