GSI Analysis: New Jersey GDP and Income Well-Maintained; November Labor Market Looks Poor Relative to Others

• State’s Q3 GDP growth in sync with the nation’s, and personal income gains highest in the Northeast.
• The upbeat news on GDP and income, though, reflects developments through September, and may not reflect all the recent softness in the state’s labor market.
• November unemployment rate is the 3^rd highest in the nation- and the highest regionally with PA, CT, MA and New York all lower than NJ.

Despite the recent slump in the labor market, some New Jersey indicators remained strong through the summer. The state’s real GDP is estimated to have grown at a 4.8% rate in the third quarter, virtually the same as the nation’s 4.9% pace and ranking in the middle of the pack (26^th). Only Pennsylvania (5.6%) and Maine (4.9%) were higher in the Northeast; New York  (3.5%) and Delaware (3.3%) were much lower, while Connecticut (4.7%) and Massachusetts (4.8%) were comparable.

The state’s GDP in current dollars surpassed an $800 billion annual rate in Q3. This estimate of the dollar size of the state’s economy can be useful to put discussions of public spending, taxes, and debt into context.

Personal income growth was even better New Jersey’s 4.0% growth rate in the third quarter was comfortably above the nation’s 3.5% rate. We ranked 12^th, and were tops in the Northeast. Also, it was the second consecutive quarter in which New Jersey’s income growth was higher than the nation. The critical “net earnings” portion of personal income—employee compensation plus the income of unincorporated businesses—grew at a 5.9% rate, matching the national pace. A number of Northeastern states, including Pennsylvania, Massachusetts, and Connecticut, did have faster growth in earnings than New Jersey. Our overall income growth was higher because transfer payments fell more rapidly in those other states.

The upbeat news on GDP and income, though, reflects developments through September, and may not reflect all the recent softness in the state’s labor market. This morning the November labor market data from all 50 states was released. New Jersey is in the dubious position of having the third highest unemployment rate of any state; only Nevada’s 5.4% and California’s 4.9% are higher than our 4.7% (DC, not counted as a “state” is at 5.0%). Our rate is also in sharp contrast to Pennsylvania .(3.4%), Connecticut (3.6%), and Massachusetts (2.9%). New York’s 4.3% is not too much lower than ours, but is not considered statistically different than the nation’s 3.7%.