Study says New Jersey is in a mild recession

NEWARK, N.J. - New Jersey is more than a half-year into a mild recession that should end in early 2010, according to a Rutgers University economic forecast released yesterday.

The state will lose about 20,000 jobs beyond the 10,000 already lost this year before a recovery begins, the semiannual report of the Rutgers Economic Advisory Service said.

The report appears to be the first analysis to state that New Jersey is in recession and describe its breadth and magnitude.

"The state's job base has barely changed since the beginning of 2006, while employment in the U.S. continued to grow until December 2007," said Nancy Mantell, the service's director.

A national recession is generally considered two consecutive quarters of falling gross domestic product. No such measure is available for New Jersey, so the Rutgers assessment is based largely on job losses, Mantell said.

She predicted that job losses will continue for two years, but that the state will then resume adding jobs, leading to a gain of 250,000 over the next decade.

The total predicted job loss of about 31,000 during a nine-quarter recession is less than in recent recessions in New Jersey: 247,000 during nine quarters in the early 1990s, and 60,000 over five quarters around 2001, Mantell said.

Separately yesterday, the state said its unemployment rate inched down one-tenth of a point to 5.3 percent in June.

The Rutgers report comes as residents of New Jersey and the nation cope with growing unemployment, rising prices for gasoline and food, but falling prices for real estate.

"Things are going to be a little tight for a while. But compared to the national recession, we don't think this will be as bad," Mantell said.

The state economy peaked at the end of 2007, and recessionary or near-recessionary conditions began in January, said James W. Hughes, dean of Rutgers' Edward J. Bloustein School of Planning and Public Policy. Hughes said the state economy was "virtually dead in the water in 2007, and now it has moved into a contraction phase."

The report was released during a conference at the Bloustein School that featured Patrick O'Keefe, a former chief executive of the New Jersey Builders Association, who said prices for existing homes would continue to fall in New Jersey.

Prices have dropped about 10 percent in the last year and could drop 12 percent to 15 percent over the next 12 months, O'Keefe said, resulting in a loss of nearly one-fourth their value in two years.