May 2000 saw the beginning of a fourth year of economic expansion in New Jersey. We expect solid performance by the economy this year: employment will grow nearly as fast as it did in 1999, and the unemployment rate will fall to 3.8%. There will be an uptick in the inflation rate, but that is expected to be temporary. Although no downturn is in sight, the economy’s rate of growth will decelerate over the forecast period.
The R/ECON forecast for New Jersey in 2000 looks for employment to rise by 63,100 jobs, or 1.6%, with growth in real output of 3.0% and inflation at 3.1%. The state’s population will increase by 0.7% in 2000. (See Table 1.) The employment growth rate will fall to 1.5% in 2001 and will continue to decrease in 2002 and beyond. Population growth will decelerate to an annual rate of 0.5% between 2001 and 2005. Output growth will slow to 2.6% in 2001 and will continue to decelerate over the course of the forecast. These forces will combine to push the unemployment rate to more than 4% by 2002.