New Jersey residents enjoyed nearly 3 percent growth in their personal income over the past year, another good sign for a state economy that’s seen its share of mixed signals in 2016. Still, that rate trailed the national pace, mirroring a long-term trend that’s been playing out since the end of the Great Recession.
The latest analysis of state-by-state personal income comes from The Pew Charitable Trusts, which compared data from the first quarters of 2016 and 2015 and then adjusted for inflation. Pew found the nation as a whole enjoyed 3.2 percent growth over the 12-month period, slightly better than New Jersey’s growth rate of 2.9 percent.
New Jersey’s personal-income growth rate also fell right in the middle of the pack among all 50 states, according to Pew.
The modest increase in personal income for New Jersey residents follows similar economic trends for the state this year, including relatively small job growth and rising state tax collections. But not all of the state’s economic news has been positive. New Jersey’s unemployment rate is higher than the national average, and job creation here continues to be outpaced by the national economy, which has become a hot topic in this year’s presidential election.
Economists track personal income changes because they typically reflect when an economy is either growing or going through hard times. Personal-income changes are also followed closely in Trenton because they can be an indicator of when state tax collections will rise and fall. The Pew analysis also noted that personal-income figures are looked at by the federal government when divvying up funding for programs like Medicaid.
Pew used several income sources in addition to paychecks for its analysis, counting earnings from Social Security, rents, public assistance, and employee contributions to retirement savings and healthcare plans.
New Jersey’s personal-income growth rate of 2.9 percent over the period analyzed by Pew trailed many of its neighbors, including New York at 3.4 percent and Pennsylvania with 3 percent. But it was in line with Delaware, which also saw 2.9 percent growth.
Nationally, New Hampshire led the way with 5.4 percent growth, followed by Maine at 4.6 percent and Tennessee with 4.4 percent. North Dakota came in last with a decline of 3.9 percent, followed by Wyoming’s loss of 2.4 percent. Both Oklahoma and Alaska saw a decline of 0.4 percent.
Pew also tracked annualized personal-income growth rates for all of the states since the Great Recession began during the last quarter of 2007, again accounting for inflation. That analysis showed an increase nationally by the equivalent of 1.7 percent, which is slower than the equivalent of 2.8 percent year over year during the past 30 years.
New Jersey has had an annualized growth rate of 1.1 percent since 2007, lower than Delaware’s 1.5 percent and New York’s and Pennsylvania’s 1.4 percent.
New Jersey’s other economic indicators have followed a similar trend of modest but not overwhelming improvement this year. For example, New Jersey was up nearly 18,000 jobs through the first half of 2016, according to preliminary estimates (http://lwd.dol.state.nj.us/labor/lwdhome/press/2016/20160721_Unemployment.html) released by Gov. Chris Christie’s administration earlier this month. But it’s also been an up-and-down year for job growth, with the state suffering losses in January, February, April, and May, balanced by big gains in March and June.
State tax collections during the 2016 fiscal year, which ended on June 30, also came in about $400 million higher than the prior fiscal year, according to the latest estimates made public by the state Department of Treasury. But the Christie administration had to cut spending by about $600 million in May because Treasury had projected revenues to grow more.
New Jersey continues to trail the country in other ways with an unemployment rate measured at 5.1 percent in June, slightly higher than the national average of 4.9 percent.
A recent analysis of New Jersey’s economy released by New Jersey Policy Perspective, a liberal think tank based in Trenton, also suggested a mixed bag. While the state has recovered 103 percent of the jobs it lost to the Great Recession, job growth has not kept pace with the state’s rising population, and job creation for the nation as a whole is up 167 percent compared to the end of 2007, according to NJPP.