While the U.S. economy strengthened in 2010 and into early 2011, the New Jersey economy contin- ued weak. The state began to add jobs in March 2010 when the nation did, but then lost them rather steadily through January 2011. The good news is that the decline in 2010 was only 24,000 jobs from January 2010 to January 2011, compared to losses of 135,000 and 107,000 in the previous two years. Preliminary data for February show (again) the beginnings of a turnaround. The culprit in the state’s heavy losses in the past year was the public sector. After growing steadily through the first decade of the century, government employment plunged in the second half of 2010 and intoarly 2011. However, as can also be seen in Chart 2, the private sector has not taken up the slack. During 2010, private sector jobs stayed in a range very close to 3,210,000. They dipped again in January 2011 and returned to that average level in February. The New Jersey unemployment rate was lower than that in the U.S. through much of the past decade, and this held true during most of the recession as well. In New Jersey the decline in the unemploy- ment rate in 2010 seems to have been the result of people dropping out of the labor force as both the number of people employed and unemployed fell during much of the year. The state rate has risen above the national rate in early 2011 when some workers seeing more opportunity re-entered the labor force.