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On economy, reality trips up Christie's message

Gov. Christie has blasted President Obama's economic record and won praise from some in the GOP for vowing to boost annual GDP growth to 4 percent, about double the current rate.

Gov. Christie has blasted President Obama's economic record and won praise from some in the GOP for vowing to boost annual GDP growth to 4 percent, about double the current rate.

The Republican governor, who announced his candidacy for the presidency Tuesday, is widely seen as a gifted political communicator and retail politician. But he may not be the best messenger for GOP economic policy, given New Jersey's lackluster economic performance since he took office in 2010.

Although the state economy has shown signs of life in recent months, economists aren't sure the growth can be sustained, and it all may be too late for Christie, anyway.

The Garden State has added 186,000 private sector jobs since 2010, for job growth of 5.8 percent, less than half the 11.7 percent nationally, according to U.S. Labor Department data. Among New Jersey's neighbors, New York's private-sector job growth since 2010 is 11.5 percent, and Pennsylvania's 7 percent.

New Jersey has recovered about 80 percent of the jobs it lost during the recession, while the national economy has reached a new peak. And New Jersey's unemployment rate, 6.5 percent, is more than one percentage point higher than the national rate.

The state's economy has picked up steam recently. From December 2014 through May, its job growth of 0.86 percent roughly matched the nation's and was better than Pennsylvania's 0.65 percent.

And gross income tax collections exceeded expectations last fiscal year, though Christie's treasurer cautioned that this likely was not a harbinger of stable growth.

Christie's favorability ratings among GOP primary voters are so low compared with leading contenders for the party's nomination that his economic record "will only become an issue if his opponents start seeing him as a credible threat and they have to go after him," said Patrick Murray, director of the Monmouth University Polling Institute.

"There's 16 candidates in the race," he said. "Voters are not looking at the micro policies and successes of each of these candidates."

But donors might, and a stronger economy could help Christie tell a better story about his state.

"It has picked up. It's one of the best performers in the Northeast, so the question is, will it maintain this growth path?" said Sohini Chowdhury, a senior economist with Moody's Analytics. "I would doubt it," she added, "just because the fundamentals are not really there."

In New Hampshire on Thursday, Christie made this case for his economic stewardship, saying that when he took office, he eliminated or reduced hundreds of programs and "we didn't raise taxes."

A combination of factors has contributed to New Jersey's slow recovery, economists said: the impact of Hurricane Sandy; the partial collapse of gaming in Atlantic City; a hangover from the housing bust; and conditions that predated the recession, such as the high cost of doing business in the state and restructuring in the pharmaceutical industry, a field that once helped drive the state's economy.

The closing of four casinos last year and resulting loss of 8,000 jobs delivered a "real hit to a major state industry in a very short period of time," said Rutgers economist Joseph J. Seneca. The casino closings also hit suppliers and distributors, he said.

Meantime, the federal and state governments have been slow to distribute federal money since Sandy hit the Shore in October 2012. Seneca said he had expected that money to be spent more quickly. "That was another body blow that lasted and continues to last," he said.

Even before these crises, New Jersey was fighting an uphill battle.

One in every 483 homes in the Garden State is in foreclosure, the second highest ratio in the country, according to RealtyTrac.

As foreclosed homes are brought back to market, they're sold at a discount, pulling down the average price. That is a disincentive to build new homes, Chowdhury said.

Residential and commercial construction job growth has lagged, contracting 5 percent last year, said Stockton University economist Oliver Cooke.

And while the nation had recovered 88 percent of its manufacturing jobs by last year compared with the 2007 peak, New Jersey had regained 78 percent, Cooke said, and "I don't think we've bottomed [out] yet."

The finance sector in North Jersey also is growing slowly, especially compared with New York. Since the financial crisis, the sector has become even more centered in New York City and Boston at the expense of New Jersey and Connecticut, Mark Vitner, senior economist with Wells Fargo, wrote in an April report.

"It reflects the growing preference by young people to want to live in the city," Vitner said in an interview, and "businesses are following."

This trend has helped the Northeast generally, but not the suburban Garden State.

Other unique challenges impede growth, Vitner said: The state's dense population limits development; its finances are in poor shape, as demonstrated by credit downgrades; and high costs make it difficult to attract new businesses, "much less keep the ones you've got."

This isn't a new trend in New Jersey, he said, citing long-term demographic challenges. For example, for every person that moved to the state in 2013, 11/2 left, the fourth worst ratio in the country, according to the most recent census data.

Yet there are bright spots. Jobs in sectors such as biotech are growing, replacing some of Big Pharma's presence, Chowdhury said.

Businesses uprooted by Sandy are growing again, and the Atlantic City layoffs "are now behind us," Vitner said. "I think the economy is clearly in a better place. It's eking out modest growth."