A majority of New Jersey businesses are pessimistic about the State's near-term economic outlook, and they continue to give the Garden State poor grades for its business climate and its ability to control costs like taxes and health insurance.

At a Trenton press conference, NJBIA President Philip Kirschner said the results of NJBIA's 49th annual Business Outlook Survey showed that 49 percent of businesses expect business conditions in New Jersey to weaken in the first six months of 2008, while just 13 percent expect conditions to improve. This is only marginally better than last year’s outlook, which was among the weakest since the 1989-92 recession years. However, as was true last year, most respondents who expect a worsening of conditions anticipate that it will be only moderate.

As for the business climate, only 19 percent of respondents (up from a record low of 17 percent last year) said New Jersey is a good place for expansion of their business facilities. They identified the high overall cost of doing business as one of the three biggest problems they face in New Jersey, along with the cost of health insurance and property taxes. Large majorities said New Jersey does a worse job than other states in controlling government spending, taxes, health insurance costs and the cost of regulatory compliance. Most respondents also said New Jersey has a worse attitude toward business than other states.

In their own businesses, the 2008 survey found that businesses' collective hiring plans remain close to last year's restrained levels. Twenty-five percent anticipate hiring more workers, 14 percent anticipate a reduction in employment, and the rest (61 percent) expect to keep employment stable. This outlook is consistent with the pattern of modest employment expectations and weak job growth seen over the past several years, and it signals the likelihood that private-sector employment will continue to grow slowly in New Jersey in 2008.

A more hopeful survey finding is businesses' outlook for their own sales and profits, which has improved from last year's low levels. Fifty-seven percent expect sales to rise in the year ahead, up from 43 percent having this expectation a year ago. And 51 percent expect profits to increase, up from 37 percent last year. (The outlook for sales and profits had declined in NJBIA’s two previous surveys, falling close to levels seen in the 2001 recession.)

"Given the recent slowdown in economic activity, the improved outlook for sales and profits comes as a relief, but it's not a reason to celebrate," Kirschner said. "Had the outlook for these core indicators fallen from last year's already low levels, this almost assuredly would have signaled an imminent economic downturn."

Businesses are more positive in their outlook for their own industries than they are for the national or State economies. Overall, 25 percent expect conditions in their own industries to improve in the first half of 2008, compared with 33 percent who expect conditions to worsen.

In the wage and salary area, 72 percent plan to boost pay levels in 2008, while 26 percent plan to keep pay at current levels, and 2 percent plan reductions. Half of all survey respondents said they plan to give pay raises ranging from 2-5 percent, while 10 percent said their raises would be less than 2 percent and another 12 percent said their raises will exceed 5 percent.

The survey was sent to a representative sample of NJBIA member companies in September 2007. Results are based on the first 1,300 responses. Respondents were mostly small businesses, with 84 percent having between two and 49 employees.

NJ Ranked Worst State for Operating a Small Business

New Jersey is the worst state in the nation in which to operate a small business, according to the Small Business and Entrepreneurship Council's Small Business Survival Index 2007. Released November 9, the index analyzes taxes, regulations, mandates, government spending, litigation systems and property rights in each state and then ranks them according to the public policy climate for entrepreneurship. According to the index, South Dakota, Nevada, Wyoming, and Washington are the best states for small businesses, while New Jersey, California, Maine, and Rhode Island are the worst States.

The index is the second national ranking in as many months to give New Jersey's business climate poor marks. In October, the Tax Foundation's 2008 State Business Tax Climate Index ranked New Jersey 49th in the nation when it comes to business-friendly tax systems.

Nonprofit Pay-to-Play Deadline Extended Again, Exemption Expected

The Election Law Enforcement Commission voted November 29 to again extend the deadline for nonprofits to report the contributions of their board members and officers under New Jersey’s pay-to-play law. Thousands of nonprofit organizations, including hospitals, community groups and service providers will now have until January 15 to track down political contributions of their board members, top executives and their spouses.

At the same time, legislators are expected to introduced a bill to exempt nonprofit entities from the law altogether. Lawmakers may enact it before the end of the lame-duck session January 8. NJBIA supports the bill. While the Association supports transparency, the regulations for complying with the pay-to-play laws are overly broad and burdensome for all businesses. For more information, contact at ext. 209.

Nominate Your Candidate for the NJ Business Hall of Fame by Dec. 15

Nominate your candidates for the 2008 New Jersey Business Hall of Fame. The program was founded in partnership with NJBIA, Junior Achievement and The Star-Ledger to honor New Jersey's business leaders who are role models for today’s youth. Every year, three laureates are recognized for their outstanding accomplishments in their industries and for their commitments to improving the quality of life in New Jersey. Make Your Nomination

How Will the Elections Impact Your Business? Find out at NJBIA’s Public Policy Forum, Tuesday December 11

Governor Jon Corzine has accepted our invitation to be a keynote speaker. Presidential candidates Senator Hillary Rodham-Clinton and Mayor Rudy Giuliani have also been invited to speak at this networking and public policy event of the year. Entitled ELECTION YEAR WATERSHED: How Will the 2007-2008 Elections Impact Your Business?, NJBIA’s Public Policy Forum will bring together business leaders, economic experts and top policy makers from all over the State. The program features a panel of top legislative leaders, who will discuss the Legislature’s plans for 2008; predictions on the presidential elections from seasoned political observers; and an economic forecast for New Jersey by three CEOs and a top regional economist.

The event will be held from 7:45 a.m. to 2:00 p.m. at Sheraton at Woodbridge Place, Iselin (Exit 131A, Garden State Parkway). The cost is $170 per person for NJBIA members and $230 for nonmembers. Register online now, or contact at 609-393-7707, ext. 239, for more information. To become a sponsor, contact at ext. 219.