Job Losses Continue as State and Nation
Settle into First Recession in a DecadeNew Jersey and the nation continued to lose jobs in November as the economy settled into its first recession in a decade, a contraction that is widely expected to continue at least through the middle of next year.
The National Bureau of Economic Research, the arbiter of the nation's economic cycles, recently declared that the US economy entered the recession in March. The organization also said the terrorist attacks of September 11 "clearly deepened the contraction."
In New Jersey, an already significant loss of jobs was compounded in November with the disappearance of 8,300 private-sector jobs, the second largest loss in eight months. Three thousand seven hundred jobs were lost in the manufacturing sector and 4,700 in the service sector.
Since April 2001, 24,400 private-sector jobs have vanished in New Jersey, a decline of about one percent. (See first chart below.) Virtually all of the net loss has occurred in the manufacturing sector, which has shed 25,299 jobs since the start of the year, a decline of 5.5%. (See second chart below.)
It is likely that the state's service industries would also be in negative territory for the year were it not for the destruction of the World Trade Center, which sent an exodus of 15,000 jobs from downtown Manhattan into New Jersey in the weeks following the terror attacks. As of November, the state's service industries had eked out an 11-month gain of 1,400 jobs.
Employment in the construction industry has remained mostly stable, ending November with an 11-month loss of just 400 jobs.
Regional economists generally expect the recession in New Jersey to be shallow and short-lived, especially when compared to the last recession. New Jersey saw the loss of a quarter of a million jobs in 1989-92, one of the worst employment contractions on record.
Today, New Jersey is in a far better position to weather a recession. The state economy suffers none of the imbalances or excesses of a decade ago such as bloated corporate middle management and rampant real estate speculation.
New Jersey also benefits from a tremendously diversified industry base. Manufacturing, for example, now accounts for only one out of every eight jobs in the private sector, compared with one in two jobs during manufacturing's heyday in the 40s and 50s.
Judged by its unemployment rate alone, New Jersey remains in better shape than the nation as a whole. The state jobless rate dipped to 4.7% from 4.8% in November, one whole percentage point below the national rate of 5.7%.
The downturn in New Jersey is nonetheless serious, with two-thirds of the 1,600 companies participating in NJBIA's 2002 Business Outlook Survey reporting in September that they were either in a recession or heading into one. The collective outlook of individual companies for sales, profits and employment in the year ahead has fallen to the lowest levels in eight years, the survey found. Falling sales and profits are forcing many companies to cut expenses and retrench.
For more information, contact Christopher Biddle at cbiddle@njbia.org.
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