GDP, Personal Income
GSI Analysis: New Jersey Q4 GDP & Income Growth Sluggish to Close 2022
- Real GDP growth rate of 1.1%, 38th in the nation, and less than half the U.S. gain of 2.6%
- Washington State, smaller in population than NJ, may have a larger economy
- Income growth rate of 5.2% also under the national average of 7.4%
On March 31st, the U.S. Bureau of Economic Analysis issued its report on the Gross Domestic Product by State and Personal Income by State, 4th Quarter 2022, covering the months of October through December 2022 and for the full year 2022. Dr. Charles Steindel, the former Chief Economist of the State of New Jersey, analyzed the report for the Garden State Initiative:
The numbers on New Jersey’s 2022 fourth quarter output and income were disappointing. The state’s real GDP crept up at a sluggish 1.1% annual rate, compared to the nation’s 2.6%, and we ranked 38th. While our showing was better than New York (where output was unchanged) we were well behind Pennsylvania’s 3.2%. No industry stood out as a major source of the Q4 softness; it was the case that most sectors trailed the nation.
The sluggish Q4 did come after a stretch of stronger growth in New Jersey. For 2022 as a whole the state’s real GDP rose 2.6%, better than the nation and ranking 13th (New York ranked 8th and Pennsylvania 19th).
Today’s numbers show Washington State’s real GDP being slightly larger than New Jersey, both in the fourth quarter and for 2022 as a whole. This is notable because Washington has a smaller population (9.2 million vs. 7.7 million). Previously, the only states with larger real output than New Jersey had a larger population. However, real GDP in Washington is unusually hard to measure, given the difficulties of both determining the overall real output of high-tech sectors and allocating it across the states. Before correcting for prices, GDP in New Jersey remains a bit higher than in Washington.
The personal income numbers were comparable to GDP. Our 5.1% growth rate in the fourth quarter was well below the nation’s 7.4%, and we ranked 37th (New York was about the same, but Pennsylvania was well ahead. Massachusetts’ astonishing 15.3% growth rate was first in the nation; Delaware income increased at an 8.6% rate).
Growth of “net earnings” (employee compensation plus the profits of noncorporate business) in New Jersey was substantially under the national pace, but our slow growth of government transfer payments (which could be a sign of private sector strength) was a more important contributor to our lagging performance. For 2022 as a whole, personal income in New Jersey rose 2.1%, 35th in the nation, but our gain was one of the best in the Northeast, exceeding not only New York and Pennsylvania, and even Massachusetts—despite their 4th quarter surge—but trailing Delaware.
New Jersey’s personal income remains quite substantially above Washington’s. A very large share of Washington’s GDP apparently consists of the (not reported) undistributed earnings of the large tech firms, which is not included in the income of state residents.