Income Tax, ECONOMIC OPPORTUNITY FOR ALL, Personal Income
GSI Analysis: New Jersey’s Personal Income Remains Stagnant to Finish 2021
NJ personal income declines by 0.6% while U.S. grows +2.4% in Q4
New Jersey decline ranked 40th in the nation to end 2021
Weakness reflected sharp drop in government transfer payments; earnings of workers and businesses rose briskly
Full year results similar to Q4 when NJ ranked 37th in the US
On March 23rd, the U.S. Bureau of Economic Analysis released the State Annual Personal Income, 2021 (Preliminary) and State Quarterly Personal Income, 4th Quarter 2021. Dr. Charles Steindel, former Chief Economist of the State of New Jersey, analyzed the report for the Garden State Initiative:
The US Bureau of Economic Analysis has reported that aggregate personal income of New Jersey residents fell at a .6% annual rate in the fourth quarter of 2021. This was considerably below the national growth rate of 2.4% and ranked us 40th in the nation.
However, there was a silver lining in the details: “Net earnings,” a measure that includes the compensation paid to workers in New Jersey, plus the profits of noncorporate businesses, grew at a strong 8.9% pace, which was a bit higher than the 8.1% national figure. The drop in overall personal income was due to a pronounced decline in transfer payments (more than double the national rate), reflecting the ongoing withdrawal of federal COVID support to individuals.
Relative to some of our neighboring states, in the fourth quarter New Jersey’s aggregate personal income growth rate was noticeably higher than New York’s (where both net earnings and transfers were weaker), somewhat better than Pennsylvania’s, and a bit softer than Massachusetts’, were net earnings grew at a robust rate above 10%.
Our results for 2021 as a whole were similar to Q4’s. Our 6.2% growth trailed the nation’s 7.4% gain, and ranked us a lackluster 37th. Unlike Q4, overall of 2021 net earnings growth in New Jersey (7.6%) was lower than the nation (8.9%). We did a bit better than New York and Pennsylvania and a touch worse than Massachusetts. The data for the 1st quarter of 2022 is scheduled to be released on June 22, 2022.