Unemployment numbers tell different story from Murphy’s

JOHN REITMEYER, BUDGET/FINANCE WRITER | JANUARY 13, 2022 

NJ Spotlight News

Gov. Phil Murphy delivering his 2022 State of the State address, which was released on Jan. 11

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New Jersey’s unemployment rate has consistently trailed the national average during the coronavirus pandemic, and the state’s job-recovery rate also lagged the nation’s as of late last year.

Yet Gov. Phil Murphy was far more sanguine when speaking about the current condition of the state economy during his State of the State address earlier this week.

In fact, Murphy — a Democrat about to begin a second term after narrowly winning reelection last year — largely ignored the latest figures from the federal government that indicate New Jersey is still among the states with the highest unemployment rates in the country.

Instead, the governor said during his speech Tuesday — without citing the specific source of the data — that New Jersey was topping most other states in economic growth.

“Our economy is growing again,” Murphy said during the speech, which was delivered to an empty auditorium instead of before lawmakers in Trenton due to the pandemic.

The governor’s office later indicated that Murphy was pointing to a recent federal analysis that measured the quarterly growth in GDP, or gross domestic product, that occurred as of the end of October. And that analysis puts New Jersey in the top five for growth compared with other states during the three months that made up the third quarter last year.

“Despite the rhetoric used by some, New Jersey grew faster than states often cited as pro-business,” Murphy spokesman Michael Zhadanovsky said in an email.

To be sure, seeing signs that New Jersey’s GDP is growing after the state economy was battered by the health crisis last year is noteworthy. Moreover, cherry-picking favorable statistics during speeches such as the State of the State when other metrics may be less flattering is a time-honored tradition for governors and other top officials in state government.

Republicans perturbed by Murphy’s choice of data

But many Republicans took particular umbrage with how far Murphy took things, including when he compared the latest quarterly GDP growth rate for New Jersey with a much lower rate of growth that was recorded before the governor took office in early 2018.

In the speech, Murphy claimed the statistics he cited demonstrate “real progress despite all we’ve been through and all we still face.” And he implied policies enacted during his tenure have played a major role, but without providing any clear evidence of causation.

“It almost seemed like I was living in some kind of fairytale land, just watching (the speech),” said Assembly Republican Leader John DiMaio (R-Warren) during NJ PBS coverage of the State of the State address.

While unemployment figures and GDP statistics provide good fodder for political debates about state labor and economic policies, it will soon be up to the Murphy administration to release a much more detailed analysis of the state’s economic outlook and projected revenue performance.

That analysis will come in the new annual budget for the fiscal year that begins in July, which Murphy is due to deliver to lawmakers next month.

And the stakes are high this year as the state is still contending with the ongoing pandemic. Missing the mark on the long-term economic forecast can mean major, midyear budget adjustments will be needed, especially if the administration is too optimistic about the trajectory of the state economy and the amount of revenue that is likely to be produced during the new fiscal year.

The picture is complicated

In 2020, more than $1 billion in midyear budget cuts were required to offset revenue losses triggered at the onset of the pandemic, and funding for property-tax rebates for seniors and disabled homeowners were among the casualties that year.

Meanwhile, a deeper review of the economic metrics currently up for debate in Trenton also reveals a more complicated picture.

For example, at the time the lower growth rate that Murphy pointed to during the State of the State was recorded, New Jersey was nearing the end of a long economic expansion that followed the Great Recession, a far different circumstance than the recovery now underway amid the ongoing pandemic.

Importantly, just before Murphy took office in early 2018, New Jersey had an unemployment rate that was two full percentage points lower than the 6.6% unemployment rate that was measured at the end of November 2021, according to federal statistics.

Moreover, the rate of growth for New Jersey’s GDP that was measured by the federal government in the third quarter of 2021 actually represents a major slowdown from the same quarter the year before, according to the same federal analysis cited by Murphy during the speech.

‘Weak’ labor market

In its own update on the condition of the New Jersey economy, Fitch Ratings on Tuesday labeled the state’s labor-market situation “weak” — despite some recent improvement.

The analysts from Fitch — one of the top Wall Street credit-rating agencies — also noted that since April 2020, when the pandemic triggered a steep economic downturn across the country, New Jersey has recovered 76% of its lost jobs, remaining “below the nation’s 82% recovery.”

“Job losses in New Jersey, as in other states, have disproportionately affected lower-wage workers, and the job recovery for these workers has been particularly slow,” Fitch went on to say in its review, which did not say anything about the recent growth in GDP.

For their part, the leaders of New Jersey’s business-advocacy groups seemed to view the State of the State speech as more of a mixed bag, even though Murphy promised no new taxes and highlighted millions in spending on business-recovery efforts during the pandemic.

Murphy drew praise from business leaders for taking decisive action to slow the spread of COVID-19, and for also holding back on enacting the types of economic shutdowns that were put in place at the onset of the pandemic during a more recent surge in cases.

Holding back federal aid

But he was also faulted, including for not being more aggressive with federal aid dollars from the American Rescue Plan Act that could have been used to further blunt required payroll-tax increases that New Jersey businesses have faced to replenish the state’s battered unemployment trust fund.

“While federal recovery funds were not used to assist in the replenishment of that fund, as was done in most states, New Jersey still awaits the presentation of a comprehensive plan to use ARPA funds to help support pro-growth areas like workforce development, infrastructure and innovation,” said Michele Siekerka, president and chief executive of the New Jersey Business & Industry Association.

She also pointed to the ongoing need to “bring further support to small businesses, particularly in the hard-hit hospitality, retail, manufacturing and health care sectors.”

“We are disappointed that Gov. Murphy did not mention the scores of businesses still struggling and in desperate need of immediate help,” said Tom Bracken, president and chief executive of the state Chamber of Commerce, in his response to the speech.

“This is concerning to us because the investments the governor cited may bring benefits in the long term but our small businesses need help now,” Bracken said.

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published this page in News and Politics 2022-01-13 03:16:08 -0800