The New Jersey economy has improved over the course of the year—slowly but perceptibly. After hitting bottom in January 2011 employment was up by 52,100 jobs in November. The unemployment rate was down to 9.1 percent from the recessionary peak of 9.9 percent reached in April 2010. However, the daily dose of new problems means that the probability of a strong ongoing recovery is slim.
Even with this year’s job growth, the pace of recovery in New Jersey lags that in the nation. While the U.S. has regained 28 percent of the jobs lost during the recession, New Jersey has regained only 20 percent. We expect that the U.S. economy will strengthen slowly in the coming months, although not as rapidly as we would like—particularly if Congress actually cuts off extended unemployment benefits after February and does not man- age to extend the reduction in the employee payroll tax rate for the next full year. The same can be said for New Jersey’s economy. In New Jersey, the job loss in 2010 was primarily a result of cuts in public sector jobs—jobs at both the state and local levels declined substantially. After growing steadily through the first decade of the century, government employment plunged in the second half of 2010 and into early 2011. The num- ber of government jobs was essentially flat at about 623,000 in 2011. Although, as can be seen in Chart 2, private sector jobs barely grew in 2010, they rose by 1.3 percent through the first eleven months of 2011.