New Jersey’s top business leaders are optimistic about the direction that the national economy is heading in this year, but as the state gets ready to elect a new governor, they are more cautious about New Jersey’s own immediate economic future.
The results of a new survey released yesterday by Rutgers University’s Real Estate and Policy Research Consortium revealed that enthusiasm among the state’s top business leaders has returned to the levels measured before the onset of the Great Recession in 2007, with 60 percent expecting some improvement in the national economy over the next 12 months.
At the same time, the survey found the executives still have concerns about New Jersey’s high taxes and state government’s handling of business policies, with nearly 50 percent saying they expect the state’s economic conditions to only remain about the same over the next year.
The results of the survey, outlined yesterday during a conference held at Rutgers University’s Bloustein School of Planning and Public Policy in New Brunswick, emerge as New Jersey remains locked in a pattern of slow growth in the wake of the recession, which officially ended in 2009. New Jersey only recently added back all of the private-sector jobs that were lost to the recession as the annual rate of growth here has trailed that of the national economy, while the federal job losses were all recovered in 2014.
Candidates for governor have their own ideas
The survey results were also put forward as the two candidates running in this year’s gubernatorial election, Republican Kim Guadagno and Democrat Phil Murphy, have begun to put forward their own ideas about how to guide the state economy, with Guadagno stressing a “no new taxes” and limited spending approach and Murphy calling for an increased minimum wage and more investment in technology and higher education.
No matter who wins in November, several business leaders who participated in a roundtable discussion that was held during yesterday’s conference called for a return to civility in New Jersey politics. They suggested a highly partisan and polarized atmosphere could keep the state from reaching its full economic potential. “The biggest thing missing in the state of New Jersey is constructive, civil dialogue,” said New Jersey Chamber of Commerce President Tom Bracken, who moderated the roundtable discussion.
More than 80 percent of the key state business leaders who were surveyed earlier this year by the consortium characterized the health of the national economy as “good” or “excellent.” That’s up from 70 percent before the recession hit in 2007, and well above the 8 percent that was gauged five years later. The state’s top executives were also optimistic about the next 12 months, with a little more than 60 percent expecting some degree of improvement.
But at the state level, the economy was rated “good” or “excellent” by only 38 percent of the business leaders, and just 36 percent predicted improvement over the next year. Still, the survey did find some bright spots, with more than half of the executives saying they plan to hire more employees, and nearly 80 percent saying they expect revenues to increase over the next 12 months. More of the executives rated New Jersey “fair” as a place to do business than in past surveys, something that Bloustein economist James Hughes called “not exactly a ringing endorsement, but definitely a little bit of an improvement.”
During the roundtable discussion, Gil Medina, executive vice president at the commercial real-estate firm CBRE, said he’s confident that both Guadagno and Murphy recognize the need for the state’s next governor to help restore civility in the political dialogue. But he also didn’t sugarcoat the challenges that the state is facing, including heavy debt and a huge unfunded liability in the public-employee pension system. New Jersey was also adding nearly 70,000 jobs a year in the 1990s, while the current pace is closer to 45,000.
“The next governor is not going to have an easy go of it,” said Medina, a former state commerce secretary who served under Republican Christine Todd Whitman. He also held up places like Albany, New York, which has tried to become a national center for emerging nanotechnology, as an example of how a state can benefit from crafting policies geared toward innovation and technology. “There’s an opportunity for us to really learn and apply best practices to New Jersey,” Medina said.
But Mitch Roschelle, a partner and business-development leader with PwC, pointed to New Jersey’s high taxes, which are usually cited as a major drawback in many annual rankings of the business climates in each U.S. state.
“It’s really that simple, lower taxes,” Roschelle said.
Holding the line on taxes has become a central campaign theme for Guadagno, who has served as both lieutenant governor and secretary of state during Gov. Chris Christie’s tenure, which will come to an end in January under the state constitution’s term limits.
Urban investment, public transportation
Investing more in urban areas and public transportation were also raised as key concerns during the roundtable, especially as the state tries to adapt to the dominance of the millennial generation in the national workforce. Millennials have shown a preference for so-called “live-work-play” urban environments instead of the suburban developments favored by prior generations.
Last year, Christie worked with Democratic legislative leaders to renew the state’s Transportation Trust Fund by passing a 23-cent gas-tax increase. The eight-year TTF reauthorization is expected to generate nearly $32 billion in revenue, counting both state and federal dollars, to support spending on road, bridge, and rail improvements. But in recent months, New Jersey has been dealing with a number of mass-transit problems, including last year’s fatal NJ Transit crash in Hoboken, and several more recent derailments in New York’s Penn Station, which have been blamed on Amtrak.
“I hope that they can catch up in time to match the growth in the transit villages,” said Frank Vitolo, a partner with the Morristown-based Riker Danzig law firm.
Murphy, a former Goldman Sachs executive who is a newcomer to elected politics, has put forward an ambitious mass-transit plan that calls for more investment and better oversight of NJ Transit.