Rutgers New Jersey Policy Lab releases economic forecast authored by U. professor

In November, the Rutgers New Jersey Policy Lab at the Edward J. Bloustein School of Planning and Public Policy released its economic forecast for New Jersey, which projects a slowdown of the local economy and labor market.

Will Irving, an associate professor of practice at the Bloustein School and the author of the R/ECON Forecast, said that a rise in unemployment this year is expected to continue decelerating the job market's expansion rate over the next two years.

The average unemployment rate in New Jersey is estimated to increase from 3.7 percent in 2023 to 4.2 percent in 2025, according to the forecast.

He said that other takeaways from the forecast focus on New Jersey's sluggish economic output, as measured by gross domestic product and the declining rate of population growth relative to the entire country.

"A slowdown doesn't mean a recession," he said. "It doesn't mean screeching to a halt, but it does mean stagnation in employment. Now, that doesn't mean that nobody's getting hired or fired — there's always churn in the job market."

American consumer expectations of a recession have dropped to the lowest level this year, and consumer spending remains robust despite higher interest rates. But two-thirds of Americans believe an economic downturn is likely by the end of 2024, according to an article by the Associated Press.

Irving said that the U.S. Federal Reserve has been raising interest rates post-pandemic to combat widespread inflation and achieve a "soft landing" — an economy that has slowed with lower inflation yet avoided a recession.

He said that the labor market for Rutgers graduates and other individuals entering the workforce will primarily be contingent on the national economic outlook and the likelihood of an economic soft landing.

Additionally, Irving noted that the current economic conditions have strongly impacted the housing market in New Jersey, since interest rates and the cost of new home mortgages have been jointly increasing.

"What you're seeing now is higher interest rates and prices that were staying high," he said. "That makes it very hard to consider purchasing a new home. It makes it very hard to consider moving."

The average long-term U.S. mortgage rate currently stands at 7.22 percent, while the median home list price in New Jersey is approximately $500,000.

Irving said that New Jersey has experienced a high unemployment spike in recent months, whereas most states have withstood a more moderate and steady unemployment trend.

He said that New Jersey's economy tends to mirror projections for the national economy in the long term, including for metrics on population growth and employment.

Irving said that the R/ECON Forecast and the accompanying economic model draw upon a large and varied set of data published by governmental agencies and private industry organizations.

Irving said that, overall, there are significant reasons to understand economic forecasts at a state level, since each state has a different concentration of industries, income distribution, housing markets and other distinct economic features.

​​"We're all part of the nation, and we will certainly all be affected by national trends, but those national trends are, in large part, the aggregate of what's happening in each state," he said. "Each state has its own taxation systems and its own regulations that differentiate the way that businesses and people operate and spend money and the kinds of businesses or kinds of industries that operate in each state."