New Jersey’s economic growth is expected to remain subdued through 2025, according to the latest R/ECON forecast. The report projects annual GDP growth for the state at 0.5% in 2025, a rate significantly below both previous forecasts and the national projection of 1.5%. Growth is anticipated to slow further to 0.4% in 2026 before rising modestly to 1.2% in 2027, though still lagging behind national trends.
The job market in New Jersey continues to underperform compared to the broader United States. Payroll employment is forecasted to increase by only 0.6% in 2025, which falls short of the national rate of 1.0%. While monthly job figures fluctuate, the overall trend suggests persistent weakness in employment growth through at least 2027, with expectations that New Jersey may slightly outperform the national pace beyond that point.
Unemployment remains a concern for the state, with an average rate of 4.7% projected for 2025 and a gradual rise expected through 2026 and 2027 before stabilizing around 4.5% over the longer term.
At the national level, Moody’s June forecast indicates a significant slowdown as well, with real GDP growth dropping from last year’s rate of 2.8% down to an estimated 1.5% for 2025 and further moderating to about 1.4% in 2026 before partially rebounding in subsequent years but remaining below historical averages. Monetary policy is now expected to be tighter than previously thought, with only two small reductions in interest rates anticipated later this year and a slow return toward more neutral levels by late next year.
Tariff increases are likely to drive inflation higher nationally, with projections showing consumer prices reaching an annualized rate of nearly four percent by mid-2026. Job creation across the country is also set to weaken sharply; fewer than fifty thousand new jobs per month are expected during late-2025 and almost no net job growth anticipated throughout much of next year.
Population estimates for New Jersey were revised upward last year due largely to international immigration gains despite continued domestic outmigration from the state. However, future population increases are predicted to moderate as stricter border enforcement curbs immigration flows.
Sectoral performance within New Jersey remains mixed: education and health services have led recent employment gains alongside transportation and warehousing sectors, while professional services, information technology, and retail trade continue facing challenges.
The real estate market shows some signs of stabilization as existing home sales begin recovering; however, high mortgage rates and elevated home prices persistently dampen demand while new residential construction—especially multifamily projects—has slowed considerably.
The full R/ECON economic report is available by subscription through Rutgers University’s Edward J. Bloustein School of Planning and Public Policy.
"New Jersey’s payroll employment is forecast to increase 0.6% in 2025, lagging behind the national rate of 1.0%. While monthly job data continues to fluctuate, the broader trend indicates continued softness in employment growth through 2027, before slightly outperforming the national pace thereafter." (R/ECON Forecast)
"The state’s unemployment rate, averaging 4.7% in 2025, remains elevated and is projected to rise gradually to around 5.2% through 2026 and 2027 before stabilizing around 4.5% in the longer term." (R/ECON Forecast)
"Growth will slow slightly to 0.4% in 2026 before rebounding to 1.2% in 2027, though still trailing the national average." (R/ECON Forecast)
"The forecast has become more hawkish on monetary policy compared to previous expectations..." (R/ECON Forecast)
"If your organization would like to subscribe to the full economic forecast report, please contact Will Irving at will.irving@rutgers.edu." (R/ECON Forecast)
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