R/ECON's latest economic forecast for New Jersey, released in June 2024, indicates a continued slowdown in the state's economic trajectory. However, the decline in annual GDP growth is less severe than previously predicted. The anticipated economic deceleration has been postponed from 2024 to 2025, aligning with national expectations following stronger-than-anticipated GDP growth at the end of 2023. It is expected that real state GDP will resume a steady but modest increase in 2026.
The employment outlook for New Jersey has improved due to data revisions that resulted in lower employment totals but showed stronger gains in 2023 than initially reported. Despite this improvement, the state's high unemployment rate is projected to persist as employment growth slows down over the coming years.
On a national scale, Moody's May forecast anticipates moderating yet consistent growth both short-term and long-term. Real GDP growth was robust in late 2023 but slowed to an annual rate of 1.6% in early 2024, partly due to reduced consumer and government spending. However, GDP is expected to perform better throughout the rest of the year, matching the 2.5% growth rate of 2023 before slowing again in subsequent years.
Moody's May forecast had suggested two federal funds rate cuts of 25 basis points each by September and December; however, during its June meeting, the Federal Reserve maintained rates within the range of 5.25%-5.5%, planning only one rate cut this year. The forecast also predicts a gradual reduction of rates by a quarter percentage point per quarter until reaching a range of 3-3.5% by 2026.
Employment levels in New Jersey are expected to remain relatively strong through this year before experiencing a significant slowdown over the next two years, mirroring national trends. The state's population rebounded in 2023 after three years of decline and is projected to continue slow growth over the medium to long term.
As of Q4 2023, high interest rates have not yet curbed rising prices for new and existing homes in New Jersey. Sales of existing homes decreased on a year-over-year basis while new home sales showed some recovery. Nationally, sales were slightly up compared to last year; however, average and median new home prices fell nationwide but continued rising sharply in the northeast.
The R/ECON forecast for New Jersey integrates Moody’s economy.com national forecast from May 2024 with quarterly state GDP data and personal income data through Q4 2023 alongside employment and unemployment data through Q1 2024 for New Jersey. The Rutgers Economic Advisory Service (R/ECON) aims to enhance economic forecasting tools' quality and accessibility with support from the New Jersey Policy Lab.
