GSI Analysis: Q1 GDP Report – NJ’s Economy Faced Significant Contraction as COVID-19 Impacts State

On July 7th, the United States Bureau of Economic Analysis issued its report on the Gross Domestic Product (GDP) by State for the 1st Quarter of 2020. The report, which covers January through March, is the first report to show the impact of the COVID-19 pandemic on the U.S. economy.

Dr. Charles Steindel, former Chief Economist of the State of New Jersey and current Resident Scholar, Anisfield School of Business at Ramapo College, analyzed the report for GSI:

“New Jersey’s output in the first quarter was sadly, more or less in line with the nation. Our real GDP fell at a 5.5%  annual rate; a bit lower than the national decline of 5.0%, but quite different than New York’s nation-leading 8.2%. Our performance was a bit softer than the nation’s simply because we shut down earlier than most, so sectors such as real estate (which is largely estimated from sales transactions) and wholesale and retail trade fell more than elsewhere, and unlike some states in the Great Plains there was no support from agriculture. New York was much weaker due to a collapse in finance and construction.

There’s little here to give much guidance to the second quarter results. We expect there will be a record rate of decline, and obviously it will be well in the double-digits, but more than that is hard to say.”

According to the report, New Jersey, with a decline of 5.5%, ranked 35th in the U.S. in GDP while New York and Nevada, which saw a dramatic decline in its hospitality industry, led the nation in contraction by a decline 8.2%. (see full chart below)

Comparatively New Jersey’s decline was in the middle of the pack of our regional neighbors.

The report on the 2nd Quarter GDP results are scheduled to be released by the Bureau of Economic Analysis on October 2nd.