New Jersey’s Economic Situation

Charles SteindelNew Jersey Department of the Treasury

November 20, 2013

2

Getting a Focus on the Present

• National data shows ongoing growth, but there’s still a long way to go to full recovery. – Inflation remains very low.

• State data releases delayed, as an aftereffect of the federal shutdown.– The latest job and housing permits numbers are

for August!– The available information suggests ongoing

growth.

3

The National Situation

• Employment and output are growing, but there still is a long way to go before conditions are back to normal.

• The outcome of the federal budget talks may be further near-term cuts in spending.– Better than a shutdown, but…

4

Real GDP Growth Continues

2007 - Q1

2007 - Q3

2008 - Q1

2008 - Q3

2009 - Q1

2009 - Q3

2010 - Q1

2010 - Q3

2011 - Q1

2011 - Q3

2012 - Q1

2012 - Q3

2013 - Q1

2013 - Q3

-10-8-6-4-20246

Percent change, annual rate

5

Despite Ongoing Job Growth

2010 - Jan

2010 - Apr

2010 - Jul

2010 - Oct

2011 - Jan

2011 - Apr

2011 - Jul

2011 - Oct

2012 - Jan

2012 - Apr

2012 - Jul

2012 - Oct

2013 - Jan

2013 - Apr

2013 - Jul

2013 - Oct

-200-100

0100200300400500600

Change in Nonfarm Jobs, Thousands

6

A Big Job Gap Remains

2000 - Q1

2000 - Q4

2001 - Q3

2002 - Q2

2003 - Q1

2003 - Q4

2004 - Q3

2005 - Q2

2006 - Q1

2006 - Q4

2007 - Q3

2008 - Q2

2009 - Q1

2009 - Q4

2010 - Q3

2011 - Q2

2012 - Q1

2012 - Q4

2013 - Q3

125000

129000

133000

137000

141000

145000

Nonfarm Employment 2001-2007 Trend

Thou

sand

s

7

Inflation Remains Very Subdued

2008 - Jan

2008 - May

2008 - Sep

2009 - Jan

2009 - May

2009 - Sep

2010 - Jan

2010 - May

2010 - Sep

2011 - Jan

2011 - May

2011 - Sep

2012 - Jan

2012 - May

2012 - Sep

2013 - Jan

2013 - May

2013 - Sep

-3

-2

-1

0

1

2

3

4

5

6

Overall CPI "Core" CPI (excluding food and energy)

% ch

ange

from

yea

r ago

8

Under these circumstances, the Fed continues to do all it can to support growth, while…

9

Preparing for Internal Change

10

New Jersey Conditions

• Latest hard numbers on employment and homebuilding are from August.

• Information from business surveys and other sources suggests ongoing growth.– Sandy recovery only part of the story.

11

NJ Firms See Conditions as Stable in the U.S.

Apr-11

May-11

Jun-11Jul-1

1

Aug-11Sep

-11Oct-

11

Nov-11Dec-

11Jan

-12Feb

-12

Mar-12

Apr-12

May-12

Jun-12Jul-1

2

Aug-12Sep

-12Oct-

12

Nov-12Dec-

12Jan

-13Feb

-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13Sep

-13Oct-

1380.00

85.00

90.00

95.00

100.00

105.00

110.00

115.00

120.00General Business Conditions, U.S.

12

And in New Jersey

Apr-11

May-11

Jun-11Jul-1

1

Aug-11Sep

-11Oct-

11

Nov-11Dec-

11Jan

-12Feb

-12

Mar-12

Apr-12

May-12

Jun-12Jul-1

2

Aug-12Sep

-12Oct-

12

Nov-12Dec-

12Jan

-13Feb

-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13Sep

-13Oct-

1380.00

85.00

90.00

95.00

100.00

105.00

110.00

115.00

120.00

General Business Conditions, N.J.

13

South Jersey Firms:Backing Off Giddy Spring Views, but Still Positive

on the Region

2008 - Q1

2008 - Q3

2009 - Q1

2009 - Q3

2010 - Q1

2010 - Q3

2011 - Q1

2011 - Q3

2012 - Q1

2012 - Q3

2013 - Q1

2013- Q3

-80.0

-60.0

-40.0

-20.0

0.0

20.0

General Activity in the Region

14

Philadelphia Fed’s Regional Manufacturing Index is Elevated

2008 - Jan

2008 - May

2008 - Sep

2009 - Jan

2009 - May

2009 - Sep

2010 - Jan

2010 - May

2010 - Sep

2011 - Jan

2011 - May

2011 - Sep

2012 - Jan

2012 - May

2012 - Sep

2013 - Jan

2013 - May

2013 - Sep

-50.0-40.0-30.0-20.0-10.0

0.010.020.030.040.050.0

General Activity

15

New Jersey Housing on the Rise

2008- Jan

2008 - May

2008 - Sep

2009 - Jan

2009 - May

2009 - Sep

2010 - Jan

2010 - May

2010 - Sep

2011 - Jan

2011 - May

2011 - Sep

2012 - Jan

2012 - May

2012 - Sep

2013 - Jan

2013 - May

0

5000

10000

15000

20000

25000

Housing Permits (12-month total)

16

Gains Centered Outside Shore Counties

2008 - Jan

2008 - May

2008 - Sep

2009 - Jan

2009 - May

2009 - Sep

2010 - Jan

2010 - May

2010 - Sep

2011 - Jan

2011 - May

2011 - Sep

2012 - Jan

2012 - May

2012 - Sep

2013 - Jan

2013 - May

0

4000

8000

12000

16000

20000

1000

2000

3000

4000

5000

6000

Housing Permits (12-month total)

Rest of the State (left axis)Monmouth, Ocean, Atlantic (right axis)

17

New Jersey Single-Family Home Sales Growth Outpacing the Nation

(percent change from one year ago)

2012 - Sep

2012 - Oct

2012 - Nov

2012 - Dec

2013 - Jan

2013 - Feb

2013 - Mar

2013 - Apr

2013 - May

2013 - Jun

2013 - Jul

2013 - Aug

2013-Sep

0

5

10

15

20

25

30

35

40

New Jersey U.S.

18

Auto Sales Are Also Rising

2008- Jan

2008 - May

2008 - Sep

2009 - Jan

2009 - May

2009 - Sep

2010 - Jan

2010 - May

2010 - Sep

2011 - Jan

2011 - May

2011 - Sep

2012 - Jan

2012 - May

2012 - Sep

2013 - Jan

2013 - May

2013-Sep

300000

350000

400000

450000

500000

550000

600000

New Car Sales (12-Month Total)

19

New Jersey’s Personal Income is Moving Up

2008 - Q1

2008 - Q2

2008 - Q3

2008 - Q4

2009 - Q1

2009 - Q2

2009 - Q3

2009 - Q4

2010 - Q1

2010 - Q2

2010 - Q3

2010 - Q4

2011 - Q1

2011 - Q2

2011 - Q3

2011 - Q4

2012 - Q1

2012 - Q2

2012 - Q3

2012 - Q4

2013 - Q1

2013 - Q2

420.0430.0440.0450.0460.0470.0480.0490.0500.0510.0

Billions of Dollars - Annual Rate

20

New Jersey’s Labor Force Participation and Unemployment Rates

• Our labor force participation rate is about where it was in early 2011, and is now more than 2 points above the noticeably reduced national rate.

• The drop in the national labor force participation rate has helped lower the nation’s reported unemployment rate. That factor has been much less evident in New Jersey.

21

Labor Force Participation RatesThe Gap Between New Jersey and the Nation has Widened

2011 - Jan

2011 - Mar

2011 - May

2011 - Jul

2011 - Sep

2011 - Nov

2012 - Jan

2012 - Mar

2012 - May

2012 - Jul

2012 - Sep

2012 - Nov

2013 - Jan

2013 - Mar

2013 - May

2013 - Jul

63

63.5

64

64.5

65

65.5

66

66.5

67

New Jersey US

22

Our Continuing High Participation Rate Has Held Back Declines in Our Unemployment Rate

2011 - Jan

2011 - Mar

2011 - May

2011 - Jul

2011 - Sep

2011 - Nov

2012 - Jan

2012 - Mar

2012 - May

2012 - Jul

2012 - Sep

2012 - Nov

2013 - Jan

2013 - Mar

2013 - May

2013-July

66.5

77.5

88.5

99.510

NJ Unemployment RateNJ Unemployment Rate if Participation Rate Moved Like the Nation's