GSI Analysis: New Jersey GDP & Personal Income Strong in Q3
- State GDP growth is 10th in the nation in the third quarter.
- Personal income also grew faster than the nation, led by gains in earnings.
- Household price growth was less than the nation in 2021, but housing and utility costs stay very high.
MORRISTOWN, NJ – On December 23rd, the U.S. Bureau of Economic Analysis issued its report on the Gross Domestic Product by State and Personal Income by State, 3rd Quarter 2022, covering the months of July through September 2022. Dr. Charles Steindel, the former Chief Economist of the State of New Jersey, analyzed the report for the Garden State Initiative:
We received some good economic numbers going into the holiday weekend.
New Jersey’s real GDP grew at a healthy 3.9% annual rate in the third quarter. That was higher than the nation’s 3.2% figure and ranked us 10th in the country—and higher than any other state in the Northeast. State real GDP numbers are compiled from estimates of industry output. In the second quarter, we were hurt by an odd weakness in nondurable goods manufacturing, but in the third quarter, we were aided by a marked rebound in that sector.
Personal income in the state was also strong in the third quarter, growing at a 5.5% rate—18th in the nation. In this case, two other Northeastern states, Maine and Delaware were higher than us. In both those states, there were unusually strong increases in transfer payments (incredibly strong in Maine), while that income category fell here. In contrast, the 7.2% rate of growth of “net earnings” (employee compensation plus the income of noncorporate businesses) in New Jersey was the highest figure.
Is Inflation Impacting New Jersey Income Growth?
A natural question is how much has inflation taken off from the state’s income growth—are price increases in New Jersey slower, faster, or the same as the national numbers? Surprisingly, price increases have apparently been, on average, no higher and, perhaps a bit lower recently in this area than elsewhere.
As of November, the Consumer Price Index for the New York-Newark-New Jersey area was 5.9% higher than in November 2021, compared to a national increase of 7.0%. The latest figure for the Philadelphia-Camden-Wilmington area is from October; that was up 7.8% from a year earlier, matching the national mark. Furthermore, last week the US Bureau of Economic Analysis (BEA) released estimates for 2021 of real and current-dollar spending by state. New Jersey’s price index grew 2.6% last year, which was noticeably under the 4.0% national increase.
Of course, relatively low growth in a year or two doesn’t alter the fact that the level of prices here is much higher than the national average. BEA estimates that the cost of living in 2021 in New Jersey was 9.1% higher than average. This gap is almost entirely due to higher costs for housing (34.6%) and utility (17.9%).